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Layoffs hit Big Tech as Fed prioritizes price stability over job growth

Yahoo Finance Live anchors breaks down the theme of Tuesday's morning brief as Big Tech gets caught out by the Fed's inflation goal.

Video transcript

BRAD SMITH: Job losses continue to pile up in the tech sector, as the giant multinationals that for years experienced high growth rates and led the bull run for stocks are now leading the charge to pare back staff. The Fed has played more than a small role in this, of course. Chair Jay Powell made it clear that pain in the job market was an unfortunate part of the toolkit against high inflation.

As Yahoo Finance's Myles Udland writes in today's Morning Brief, the problem for Powell is that these job losses are what the Fed hoped to achieve. Now, this is part of the, of course, dual mandate that the Fed has in terms of maximum employment but then price stability as well. And in that employment, they have acknowledged the pathway for their policy may also lead to some of what they kind of have remarked as as intended or just acceptable consequences at this point in time. Unfortunately, I have to categorize that way.

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JULIE HYMAN: Yeah. I mean, obviously, they are prioritizing price stability over full employment at this point because the employment picture, as we have seen, has held up well. Too well, probably, in the Fed's view because they are trying to bring down that end demand, bring down wages, right, as a way to help bring down inflation.

So these cuts are happening-- that they're happening is not the problem. It's that they're not perhaps happening enough that is the, quote, unquote, "problem." So, politically, it's difficult, obviously, when you see job cuts that are not directly engineered but, as you say, an acceptable consequence of what's going on here.

BRIAN SOZZI: I am curious in when these layoffs really start to show up in the jobs report. Of course, this is the big week for the jobs numbers. And is the street prepared to see jobs number below 100,000 on the headline?

JULIE HYMAN: Well, the thing is--

BRIAN SOZZI: Maybe it wants that.

JULIE HYMAN: --they are showing up in the jobs report, but they're showing up just in certain areas, as we know. When you have the likes of a Chipotle still hiring 15,000 people, when you have Walmart adding people, when you have those service segments of the economy-- hospitality, et cetera-- that are still having trouble finding people, it's hard to see when that sort of balances out enough to actually result in declines in jobs.

BRIAN SOZZI: Well, that raises the prospect, well, then, does the Fed need to keep going on these rate cuts? And then that big Jan rally is just-- could be tossed in the trash.

BRAD SMITH: Well, and then the counterbalance, of course, to the joblessness, if you will, is do we start to see some of the job openings pulled off the table as well, which would be the serious counterbalance here.

JULIE HYMAN: Precursor.

BRAD SMITH: Right.

JULIE HYMAN: Yeah, exactly.