The S&P 500 (SPX) opened Friday down by over 1% after the unemployment rate bounced back to 4.4% in February, one of the highest levels since 2021. The rate was 4.4% in December before edging lower to 4.3% in January.
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Trade QQQ with leverageFurthermore, the U.S. economy shed 92,000 jobs in February, while January and December’s job additions were revised lower by a combined 69,000. Since May 2025, the economy has lost 19,000 jobs on a cumulative basis, evidencing the growing weakness in the labor market.
When Will the Fed Cut Rates?
A slowing labor market could influence the Fed to cut rates sooner. Lower rates stimulate the labor market by reducing borrowing costs for businesses and consumers, encouraging companies to invest and hire more workers.
“Significant weakening in the labor market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines,” said Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner. While the central bank is still expected to hold rates steady this month, the odds of a 25-bps rate cut at the April 29 Federal Open Market Committee (FOMC) meeting rose to 17.7% from 11.4% a day ago.