Premarket stocks: Fed wants to limit wage growth. It is especially bad for women

New York (CNN) The US labor market is remarkably strong – unemployment is at a five-decade low, even as the Federal Reserve does everything it can to cool the economy in its fight against inflation. Wage growth is also increasing, as the demand for labor exceeds the supply.

But not all workers have enjoyed wage gains equally.

A new Wells Fargo report shows that the number of single women in the workforce has grown three times faster than the broader workforce over the past decade. At the same time, their wages have not kept pace with their male counterparts.

These gaps have a profound impact not only on worker well-being, but also on the overall economy and stock market.

What happens: Never-married women earned just 92% of what never-married men did last year, according to the Wells Fargo report. Women also reported having 29% less wealth, overall.

It’s not just single women. The overall pay gap between men and women has stagnated over the past 20 years.

By 2022, American women earned an average of about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly wages for both full-time and part-time workers.

That represents an improvement of just 3 cents since 2002.

Those wage gaps are “persistently disappointing,” ADP chief economist Nela Richardson told CNN on Thursday. She said the gaps are seen across all age groups, job levels and industries.

They are also bad for the economy as a whole. On average, working women in the United States lose a combined $1.6 trillion each year due to the wage gap, according to the National Partnership for Women and Families. That loss of pay means women have less money to support themselves and retire on, as well as spend in their communities.

Markets suffer: Companies with smaller gender pay gaps tend to be rewarded by their shareholders.

This may be due to the popularity of ESG investing – when traders evaluate companies using environmental, social and governance factors. “The gender wage gap informs investment strategies,” Refinitiv analysts wrote in a recent report. “Our recent analysis shows that (shares of) companies with no gender pay gap perform better than companies with a pay gap between male and female employees,” Refinitiv wrote.

Companies with more women in highly paid executive positions also tend to be more profitable.

That SHE fund, which was designed to measure the performance of U.S. large-cap stocks that are gender-differentiated, has returned 3.1% so far this year — a full percentage point higher than the S&P 500.

A McKinsey study of 366 companies across the US and UK found that companies in the top 25% for gender diversity among their executives were also 25% more likely than their counterparts to achieve above-average profitability.

Jobs, bank stocks and Biden: What Wall Street sees

▸ Welcome to job day.

Investors have been eagerly awaiting the release of February employment figures from the Bureau of Labor Statistics for weeks. That’s because January’s report left them stunned as the US economy blew past expectations, adding 517,000 jobs in the first month of the year, bringing the unemployment rate to a 54-year low.

This time, analysts expect a tamer but still strong 205,000 jobs were added last month, according to Refinitiv data.

The persistently tight labor market has fueled concerns among Fed officials that there is an imbalance in wage negotiations that could put upward pressure on inflation. Federal Reserve officials and Wall Street will keep a close eye on Friday’s report as policymakers try to cool the economy to rein in high prices.

▸ Bank stocks fell on Thursday after SVB Financial Group, a bank that lends primarily to technology companies, told investors it had to sell $1.75 billion in shares at a loss to cover rapidly declining customer deposits.

That sparked concerns that the Federal Reserve’s rate hikes are preventing banks from raising capital. Major US banks hit their worst day in nearly three years as fear gripped Wall Street.

Silicon Valley-based SVB posted the biggest decline in the sector, down more than 60%, as CEO Greg Becker said the bank could deal with problems for some time to come.

Shares of JPMorgan Chase (JPM) decreased by 5.4 per cent. Bank of America (BAC) fell 6.2 per cent Wells Fargo (WFC) fell 6.2% and Citigroup (C) was 4.1% lower.

▸ President Joe Biden released his budget on Thursday, which included proposed new taxes on the wealthy and corporations.

The Biden administration proposed a 25% minimum tax on the wealthiest Americans, new taxes on oil and gas companies and an increase in the US corporate tax rate to 28% from 21%.

Biden would reduce the deficit “by asking the wealthy and big business to start paying their fair share and by cutting wasteful spending on Big Pharma, Big Oil and other special interests,” said the director of White House leadership and budget, Shalanda Young.

Biden’s budget proposal is just that – a proposal. But it does give Wall Street a glimpse into the president’s priorities for the next year.

American whiskey travels the globe

U.S. spirits exports explode to new record in 2022: About $2 billion of U.S.-made alcohol was shipped overseas last year, up about 30% from 2021.

So have our friends overseas gained a new appreciation for Kentucky bourbon? Perhaps, but the boom is more likely due to the temporary halt of European and British tariffs on American alcohol, according to a new report by the Distilled Spirits Council of the United States.

It makes it cheaper for Brits and other Europeans to buy hard drinks that come from the States.

When it comes to hard alcohol, Europe is the United States’ largest export market. About 34% of US spirits were exported to the EU last year, worth a total of US$703 million. This is an increase of 25% compared to 2021.

Dig deeper: Brown-Forman (BFA)the company behind Jack Daniel’s, Woodford Reserve and Old Forester Bourbons, among other spirits, missed Wall Street earnings expectations when it reported its corporate results Wednesday.

The company’s stock is down more than 5% so far this year.

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