President Biden got good news on the economy this week. Employers added 379,000 jobs in February, nearly twice as many as economists expected. The biggest gains came in leisure and hospitality, signaling the beginning of a recovery in the sectors hit hardest by the coronavirus pandemic. Job gains could accelerate in future months.

But financial markets are rattled, offsetting some of the optimism. An abrupt rise in interest rates during the last month finally led to a rollover in stocks, with the NASDAQ tech-heavy index down 8.4% since Feb. 12, and flat for the year. The S&P 500 has lost less since Feb. 12 and is up 2% on the year. Stocks have been on a monster rally since last March, so nobody’s losing their shirt. But recent market volatility reveals investor concern about inflation, Federal Reserve policy and unprecedented levels of federal borrowing needed to fund some $6 trillion in stimulus spending since last March.

Interest rates on the benchmark 10-year Treasury spiked from 1% on January 27 to 1.55% on March 5. Rates remain low by historical standards, but they’ve jumped by a lot in a short period of time. That represents changing market expectations about the direction of the economy. That’s probably a good thing, but it can cause modest losses in stocks. There’s an outside chance markets are sniffing out trouble ahead. Biden never promised to be the Stock Market President, but stocks should rise if a real recovery takes root. And he did promise a recovery.

The economy is transitioning from a limp to a walk, and soon, perhaps, to a trot. Rates plunged to record lows last year, and a modest uptick would fit with an improving economy. Average mortgage rates ticked back over 3% this week, which will raise borrowing costs compared with rates from two months ago. But they’re still far below levels prior to the pandemic.

Rising rates might indicate inflation is on the way. A little bit more inflation would be welcome. More than that would be unwelcome, because the Federal Reserve would have to start tightening monetary policy sooner than expected, which in turn could choke off the recovery. How much inflation is too much? Anything above 2.5% or so. Again, we’ve lived through much worse in the past, and we could survive 5% or 8% inflation if we had to. But that would stall job growth, and employment is still 11 million or 12 million jobs lower than it should be.

Rising rates put downward pressure on stocks for a few reasons. Since bonds are an alternative to stocks, they become more attractive as rates rise, drawing some money out of stocks. Rising rates tend to depress tech shares more than others. Investors plow into high-growth tech stocks during a downturn, but rotate into other sectors more likely to outperform during a recovery. That’s why tech shares are down more than the broader market this year.