Stocks reverse overnight losses after the disappointing jobs report bolsters expectations for a less aggressive Fed

Thomson Reuters

Stocks turned negative Friday amid concerns of a slowing US economy after the jobs report missed Wall Street estimates.

The Dow Jones Industrial Average slid 1.6%, or about 400 points. The Nasdaq Composite fell 1.7%, and the S&P 500 was down 1.4%. Stocks had initially risen amid renewed expectations for the Federal Reserve to pursue a slower rate path.

Semiconductor companies, including Micron Technology (-3.3%) and Nvidia (-3.7%) were among the biggest losers. Technology giants were also lower, with Apple down nearly 2% and Intel 2.4% lower. 

The US economy added 155,000 jobs in November, well below expectations of 198,000, and the unemployment rate held near historic lows at 3.7%. Wages grew at a slightly slower-than-expected pace, rising 0.2% for a second month.

“For markets, of course, this is the new Goldilocks: still strong-enough job growth, but a more cautious Fed will be good for markets and overall business confidence,” said Josh Wright, chief economist at iCIMS Inc.

Treasury yields seesawed as market watchers digested the report. After initially falling, the yield on the benchmark 10-year note erased its early losses and climbed back to unchanged near 2.895%. All eyes have been on rates this week after parts of the yield curve inverted, an occurrence seen as a potential recession signal. The dollar slipped against a basket of peers.

“The immediate reaction in Treasuries was that this is a soft report, but yields are now back to the pre-data level; we think that makes sense,” Ian Sheperdson, chief economist at Pantheon Macroeconomics, said in an email. “These numbers won’t deflect the Fed next week, and we see every reason to expect a return to 200K job gains in December.”

Officials are still expected to hike the fed funds rate by a quarter percentage point to a

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