Wall Street stocks fell at the start of trading on Friday after disappointing U.S. jobs data, as investors weighed the possibility of swaying the Federal Reserve’s thinking on whether to hold interest rates unchanged or raise them. .
The Dow Jones Industrial Average (^DJI) fell 0.3%, or about 90 points, as the major indexes recovered ground on Thursday. The S&P 500 (^GSPC) fell 0.4%, and the tech-heavy Nasdaq Composite Index (^IXIC) fell 0.5%.
September’s employment statistics showed no signs of the expected cooling in the labor market. The U.S. economy added 336,000 jobs in September, almost twice as much as expected. That would give the Fed further evidence that the labor market remains strong, potentially requiring more restrictive policy over a longer period of time.
Friday’s data will be the last major employment report before the central bank’s next policy meeting.
Read more: What the Fed’s rate hike pause means for bank accounts, CDs, loans, and credit cards
The Fed is also keeping an eye on the bond market, with senior Fed official Mary Daly saying Thursday that policymakers may not need to raise rates again if long-term bond yields remain near current levels. The ferocious rise in yields continued Friday after the jobs report, with the 10-year Treasury yield (^TNX) rising again above 4.8%.
Some analysts say the bond sell-off is likely to continue given there is no clear catalyst to stem the bleeding. They think it will take a sharp fall in stock prices or a weakening of the economy to encourage yields to fall.
Concerns about growth are weighing on oil prices, which are expected to fall by the most in a week since March on a cloudy demand outlook. WTI crude oil futures (CL=F) turned higher after falling below $82 a barrel on Friday, while Brent crude oil futures (BZ=F) rose to break through the key $84 level.
Great jobs report strengthens Fed’s ‘long-term rally’ stance
The September jobs report released on Friday was a big hit, with the number almost double what economists expected. The strong reading provided another data point showing the economy is more resilient than most expected in the face of the Federal Reserve’s aggressive tightening campaign.
Experts say a strong labor market strengthens the case for the Fed to raise rates again, making the central bank even more acutely aware of the need to keep interest rates high for an extended period of time.
“Friday’s jobs report suggests that labor data remains very strong and solidifies the case for further Fed rate hikes this year,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management. “It is also likely that the pace of the final rate cut will be delayed.” . “Given the strength of the economy, investors will need to get used to the idea that interest rates will be higher for an extended period of time.”
According to the CME FedWatch tool, the market now expects the Fed to be more likely to raise rates next month. The day before the employment report was released, it was predicted that the probability of an interest rate hike in November was 20%. That number jumped to nearly 30% on Friday.
Some experts say a soft landing is becoming more likely as job losses have not piled up as a result of the Fed’s previous interest rate hikes. “Resilient job growth suggests there is some cushion in the Federal Reserve’s efforts to rein in inflation without causing job losses,” said Daniel Chao, chief economist at Glassdoor. ” “With the labor market in a resilient maintenance pattern, we are approaching one month until we enter 2023 without a recession.”
Stocks open lower after blockbuster jobs report
Losses widened in the first week of October after stocks fell at the opening bell on Friday. Investors rallied after the newly released September jobs report showed the U.S. economy added 336,000 jobs, smashing expectations that had called for an increase of 170,000 jobs. The latest jobs report raised concerns that the labor market is not slowing as much as the Federal Reserve would like as it struggles to keep inflation down.
The S&P 500 (^GSPC) was down 0.5% and the Dow Jones Industrial Average (^DJI) was down about 0.3% or nearly 100 points. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, fell by about 0.5%.
Tesla, Activision Blizzard, Coca-Cola: Stocks rise in pre-market trading
Below are some of the stocks leading Yahoo Finance’s trending ticker page in pre-market trading on Friday.
Tesla (TSLA): Tesla stock fell more than 2%. Tesla has again reduced the prices of its compact sedan Model 3 and SUV Model Y.
Activision Blizzard (ATVI): Activision stock rose nearly 1% premarket. Microsoft is aiming to close its $69 billion deal with “Call of Duty” publisher Activision Blizzard on October 13, according to reports.
Coca-Cola (KO): Coca-Cola stock rose nearly 1% premarket after falling the previous day. Shares of carbonated soft drink companies have taken a hit as the impact of weight-loss drugs draws attention.
Nestlé (NESN.SW): Nestlé shares fell 3% on Friday. Shares of food and beverage companies were under pressure as investors weighed the potential impact of weight loss drugs and how they could reduce spending on food.
The US labor market fully recovered in September.
The U.S. labor market added 336,000 jobs in September, nearly double the 170,000 that Wall Street economists expected, and labor market resilience continues to encourage the Fed to keep interest rates higher. , or could prompt further interest rate hikes.
The unemployment rate remained flat at 3.8% in September as the labor force participation rate remained steady from the previous month. The unemployment rate rose in August due to the increase in participants.
Wage growth slowed slightly in September, with average hourly wages rising 4.2% from a year earlier, lower than the 4.3% expected to match August’s growth.
The report initially raised the probability that the Fed would raise interest rates next month to about 29%, up from 20% on Thursday. We will be watching closely to see how these possibilities evolve over the coming weeks, especially ahead of next Thursday’s release of inflation data.
Stock futures rise as US pay statistics draw attention
Major U.S. stock indexes were poised to open higher on Friday as investors awaited the release of the crucial monthly U.S. jobs report that will determine the direction of Federal Reserve policy.
S&P 500 futures (^GSPC) rose 0.24% and Dow Jones Industrial Average (^DJI) futures rose 0.22%, or 74 points. The tech-heavy Nasdaq 100 index rose 0.28%.
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