Markets are forward-looking, which means they react not just to what has happened, but to how new data changes expectations about the future.
Inflation data
Inflation readings influence expectations for central bank policy. Higher-than-expected inflation can raise expectations of tighter monetary policy, which can affect both bond yields and equity valuations.
Employment data
Labor market strength is often viewed as a proxy for broader economic health, and it can also feed into inflation expectations through wage growth.
GDP and growth indicators
Gross domestic product and related growth indicators help investors assess whether an economy is expanding, stagnating, or contracting — which affects expectations for corporate earnings broadly.
Why the reaction can seem outsized
Markets often react to the difference between actual data and what was already expected (consensus), rather than to the data in isolation. A result in line with expectations can produce a muted reaction, even if the underlying number itself is significant.
