For U.S. Investors, Realities of War and Inflation Outweigh Job Expansion

Oil soars, boosting inflation worries

A massive gain in U.S. hiring last month did little to sooth anxious investors, as oil prices jumped and stocks sank with the economy still facing threats from war, inflation, and rising interest rates.

U.S. payrolls added 678,000 hires last month, far surpassing estimates, as unemployment fell to 3.8% on "widespread" gains, the Labor Department said in its monthly jobs report.

jobs

That number easily beat the 423,000 estimated by economists in a Bloomberg News survey, who had also expected a 3.9% unemployment rate. Labor's Bureau of Labor Statistics said growth was solid in many areas of the economy, particularly in leisure and hospitality, professional
and business services, health care, and construction. About 6.3 million Americans were unemployed last month.

The labor force participation rate was little changed at 62.3% in February. January and December's new jobs numbers were revised, and another 92,000 jobs were added to the previous tallies.

Wages, after gaining 5% over the past year, were little changed in February, at $31.58 an hour.

Inflation Fears Stoked as Fuel, Grains Jump

The solid jobs report raises concerns about an overheating economy leading to faster interest rate increases. Earlier this week Federal Reserve Chair Jerome Powell said he expects rates will be raised this month.

Rising costs is also rearing its head as war in Ukraine sends fuel and wheat prices higher. Futures in oil, natural gas, gasoline, and heating oil are all up 4%. That’s boosting shares of energy companies, while shares of airlines and cruise lines are plunging.

Wheat futures again traded limit up for the fourth consecutive day, adding to their all-time high and gaining 40% for the week.

Stock of the Day: Walt Disney Co. (DIS)

The Walt Disney Co.'s shares fell after it (DIS) announced it will begin offering a lower-priced subscription option to its Disney+ streaming service that will include advertising. 

The entertainment giant said the new offering will become available in the U.S. late this year, and internationally next year. It added more details about the plan, including the launch date and price, will be announced at a later date. The current ad-free Disney+ service costs $8 a month or $80 a year. 

Kareem Daniel, chair of Disney Media and Entertainment Distribution, indicated the move is aimed at expanding the Disney+ audience. The company calls it “a building block” to achieving its target of 230 million to 260 million Disney+ subscribers by fiscal year 2024. Disney reported it had 129.8 million subscribers at the end of last year. 

Advertisers Want Access

In addition, Rita Ferro, president of advertising at the unit, noted that advertisers want this, explaining that they “have been clamoring for the opportunity to be part of Disney+” ever since its launch in November 2019.

Shares of The Walt Disney Company are falling 3% today, and they’ve lost more than a quarter of their value in the past year.