Dow drops more than 250 points as rates pop on jobs report

Stocks fell sharply on Friday after the release of mixed employment data jolted interest rates higher.

The Dow Jones Industrial Average declined 263 points as Intel lagged. The S&P 500 traded 0.8 percent lower as the tech sector underperformed. The Nasdaq Composite pulled back 1.5 percent as Amazon, Apple, Netflix and Alphabet all traded lower.

The U.S. economy added 134,000 in September, well below the expected gain of 185,000. However, the U.S. unemployment rate fell to its lowest level since 1969. Job gains for August also received a sharp upward revision to an addition of 270,000 jobs from 201,000. Wages, meanwhile, grew by 2.8 percent last month on a year-over-year basis to match expectations.

“Nobody knows what to do with it because you have the hurricane effect in there,” said JJ Kinahan, chief market strategist at TD Ameritrade. “This is one of those job reports that had something for everyone.”

Traders work on the floor of the New York Stock Exchange

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Traders work on the floor of the New York Stock Exchange

The 10-year note yield rose to 3.24 percent and hit a fresh 2011 high while the two-year note yield advanced to 2.897 percent.

“The labor market is going to keep getting tighter and that will mean higher wages,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “This is going to keep upward pressure on rates and continue to put downward pressure on stocks.”

The rise in yields pushed home-builder stocks lower. The SPDR S&P Homebuilders ETF (XHB) fell 1.5 percent and was on pace to post a 13-day losing streak.

Yields have been on the rise this week amid strong economic data. The U.S. services sector grew at its fastest rate on record last month, according to data released by the Institute for Supply Management.

Comments from Federal Reserve Chair Jerome Powell also pushed yields higher. Powell on Wednesday said that the Fed had a long way to go before interest rates would hit neutral, suggesting to markets that more hikes could be coming.

Other economic data released Friday include the U.S. trade deficit, which widened to $53.2 billion in August even amid an ongoing trade spat between the States and some of its key trade partners.

Over the past 12 months, the deficit is up $31 billion or 8.6 percent.

Tech was the worst-performing sector on Friday, dropping more than 1.5 percent. Nvidia and Analog Devices were among the worst-performing stocks in the sector, falling at least 3 percent each.

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