Wall Street drops as jobs report raises questions | national


US stocks fell on Friday afternoon after a weak employment report raised questions about the Federal Reserve’s timing to reduce its overwhelming support for markets.

The S&P 500 fell 0.2% after fluctuating between small early gains and losses. The Dow Jones Industrial Average fell 46 points, or 0.1%, to 34.708 at 1:48 p.m. EST, and the Nasdaq composite was down 0.5%.

The U.S. jobs report is typically the most anticipated economic data every month on Wall Street, and the immediate reaction to its release has been confused. US stocks rose, fell and then fell, as did Treasury yields.

The 10-year Treasury yield climbed to 1.60% from 1.57% Thursday night after initially falling to 1.56% immediately after the jobs report was released.

Much of Wall Street assumed that the job market had improved enough that the Fed soon began to cut back on its monthly bond purchases meant to keep interest rates down for the long term. Investors had also asked the central bank to start raising short-term interest rates at the end of next year. The current ultra-low interest rates have been one of the main forces pushing stocks to record highs.

But Friday’s jobs report showed employers created just 194,000 jobs last month, well below the 479,000 economists were expecting. Many investors still expect the Fed to stick to its timetable, but the numbers were low enough to at least raise the question of whether it could wait longer to cut its bond purchases or possibly raise short rates. term.

“The lack of jobs is not pretty – there is no way around it,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial, in a statement. “And many may think that will cause the Fed to pause in terms of the reduction strategy. But the jury is out on how the market will interpret the data.”

Below the surface, the numbers don’t offer much clarity. The unemployment rate fell to 4.8% from 5.1%, and the government has revised upward the hiring figures of recent months. But last month’s hires were still the lowest since December 2020. Average wages also rose a little faster than expected compared to August, helping workers but adding to concerns about inflation.

“This gives the Fed a bit more leeway on cutting and tightening in general,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.

Inflation remains a big concern for investors after hitting its highest level in at least a decade, in part due to booming supply chains as the global economy reboots after its pandemic-caused shutdown. These supply chain issues will be a key focus for investors as they review the next round of quarterly corporate financial reports.

“The earnings season is really going to be the next catalyst for the market to figure out where to go until the end of the year,” Hodge said.

Rising energy prices also contributed to inflation, and benchmark US crude for November delivery briefly exceeded $ 80 a barrel early Friday. This is the highest level of the first month contract for US oil since 2014.

This helped push S&P 500 energy stocks up 2.5%, by far the biggest gain among the 11 sectors that make up the index. Exxon Mobil rose 2.3% and Pioneer Natural Resources climbed 3.3%.

The rest of the market was more mixed. About three in five companies in the S&P 500 were down, with tech and healthcare companies among the worst off.

Friday’s choppy trading continues an already volatile run since the S&P 500 set its record on September 2. A rapid rise in interest rates and the prospect of less support from the Fed has forced investors to reassess if stock prices have risen too expensive. Concerns over rising interest rates have also combined with political unrest in Washington, DC.

The S&P 500 had four consecutive days until Tuesday when it alternated between a 1% gain and a 1% loss. In recent days, the market has been more stable amid relief that Congress appears to be delaying at least one disastrous default on US federal debt.

The S&P 500 is still on track for a 0.8% gain this week, which would be less than half of last week’s loss.

Overseas stock markets were mixed on Friday. In Europe, the German DAX lost 0.3% and the French CAC 40 fell 0.6%. London’s FTSE 100 rose 0.2%.

Asian markets were stronger. Japan’s Nikkei 225 rose 1.3%, South Korea’s Kospi added 0.6%, and shares in Shanghai gained 0.7%.


AP Business Writer Joe McDonald contributed.

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