Wall Street’s main indexes fell on Friday after a strong jobs report deepened fears that interest rates may stay elevated for an extended period.
U.S. job growth surged in September, suggesting that the labor market remains strong enough for the Federal Reserve to raise interest rates this year, though wage growth is moderating.
The Labor Department’s report showed non-farm payrolls increased by 336,000 jobs in September on a monthly basis, sharply above expectations of 170,000 additions, according to a Reuters poll of economists.
“Payrolls beat estimates by a big margin, the economy looks hot and the ‘higher-for-longer’ narrative will probably switch back to simply ‘higher’,” said Neil Birrell, chief investment officer at Premier Miton Diversified Growth Funds.
“This will give the Fed a headache and the rest of us plenty to think about, the U.S. economy is showing its resilience yet again.”
Benchmark 10-year U.S. Treasury yields hit 16-year highs following the data.
Megacap stocks Nvidia, Meta Platforms and Amazon.com fell between 0.7% and 0.8%.
Traders put the chance of an at least 25-basis point rate hike in November and December at around 28% and 45%, respectively, according to CME’s FedWatch tool.
The labor market has managed to withstand the onslaught of the Fed’s aggressive rate-hike campaign, worrying investors that the central bank would keep its monetary policy tighter for a longer duration in its fight against inflation.
The S&P 500 eyed its fifth straight weekly fall, while the Dow is on track to decline for the third straight week.
Most major S&P 500 sectors were trading lower on Friday, with utilities, often considered a bond proxy, down 1.8%, while rate-sensitive real-estate fell 1.2%.
Energy is set to be worst hit amongst the major S&P 500 sectors this week, while communications services is on track to be the best performing.
Looking ahead, data would take center stage once again with September consumer price inflation and producer price index readings due next week.
Focus will also be on the upcoming quarterly earnings season, with major banks including JPMorgan Chase, Wells Fargo, Citigroup and asset manager BlackRock reporting next week.
At 9:35 a.m. ET, the Dow Jones Industrial Average was down 103.14 points, or 0.31%, at 33,016.43, the S&P 500 was down 19.74 points, or 0.46%, at 4,238.45, and the Nasdaq Composite was down 70.06 points, or 0.53%, at 13,149.78.
EV maker Tesla fell 2.2% after cutting prices of its Model 3 and Model Y vehicles in the United States.
Exxon Mobil lost 2.3% after sources told Reuters that the U.S. oil producer was in advanced talks to acquire Pioneer Natural Resources. Pioneer’s stock jumped 9.2%.
Declining issues outnumbered advancers for a 3.57-to-1 ratio on the NYSE and a 2.20-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and 32 new lows, while the Nasdaq recorded four new highs and 102 new lows.
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