U.S. Stocks Move Sharply Lower As Jobs Data Fails To Ease Interest Rate Worries

Extending the pullback seen over the two previous sessions, stocks have moved sharply lower in morning trading on Friday. The major averages continue to offset the substantial recovery rally seen at the start of the week.

Currently, the major averages are off their lows of the session but continue to post steep losses. The Dow is down 403.51 points or 1.4 percent at 29,523.43, the Nasdaq is down 295.54 points or 2.7 percent at 10,777.77 and the S&P 500 is down 69.44 points or 1.9 percent at 3,675.08.

The sell-off on Wall Street comes following the release of the Labor Department’s closely watched monthly jobs report, which failed to ease concerns about the outlook for interest rates.

The report showed U.S. job growth slowed in the month of September but still came in slightly stronger than economists had anticipated.

The report showed non-farm payroll employment jumped by 263,000 jobs in September after surging by an unrevised 315,000 jobs in August and spiking by an upwardly revised 537,000 jobs in July. Economists had expected employment to leap by 250,000 jobs.

The slightly stronger than expected job growth reflected notable increases in employment in the leisure and hospitality and healthcare sectors, which added 83,000 jobs and 75,400 jobs, respectively.

Economists noted the job growth was even stronger excluding a drop in state and local government education payrolls, which reflected shifting seasonal patterns in teacher hiring.

The Labor Department also said the unemployment rate dipped to 3.5 percent in September from 3.7 percent in August, while economists expected the unemployment rate to come in unchanged.

The unemployment rate matched its lowest level since just before Covid-19 lockdowns began to take effect in February of 2020, which was also matched in July. Unemployment has not been lower in over fifty years.

“The drop in the unemployment rate back to a cycle low underscores that the labor market remains extremely tight,” said Kathy Bostjancic, Chief U.S. Economist at Oxford Economics. “The Fed will view the jobs report as a reason to continue its aggressive pace of tightening.”

Treasury yields surged following the release of the report, with the yield on the benchmark ten-year note moving higher for the third straight session.

A sales warning from Advanced Micro Devices (AMD) is also weighing on the markets, with the chipmaker tumbling by 6.6 percent.

AMD warned of third quarter revenue well below its previous guidance due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain.

Semiconductor stocks have helped lead the way lower following the warning from AMD, dragging the Philadelphia Semiconductor Index down by 4.2 percent.

The warning has also contributed to considerable weakness among computer hardware stocks, resulting in a 3.4 percent nosedive by the NYSE Arca Computer Hardware Index.

Substantial weakness has also emerged among gold stocks, as reflected by the 3.2 percent plunge by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks comes amid a decrease by the price of the precious metal, with gold for December delivery falling $14.90 to $1,705.90 an ounce.

Airline, retail and housing stocks are also seeing notable weakness, moving to the downside along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index fell by 0.7 percent, while Hong Kong’s Hang Seng Index dove by 1.5 percent.

Meanwhile, European stocks have moved mostly lower on the day. While the U.K.’s FTSE 100 Index has edged down by 0.1 percent, the French CAC 40 Index is down by 1.0 percent and the German DAX Index is down by 1.2 percent.

In the bond market, treasuries are moving to the downside for the third consecutive session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7 basis points at 3.896 percent.

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