“But the uncertainty over a 40-year-high inflation and … a hawkish Fed are still what investors are faced with the remainder this year.” The Labor Department’s report showed nonfarm payrolls increased by 428,000 jobs in April, versus expectations of 391,000 job additions, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.
Investors were concerned about rising Treasury yields and the likelihood of future Fed rate hikes, so stock indices in the United States sank on Friday. “Today’s strong jobs report reaffirms that the economy is on stable ground. Earnings have been good, and the job market has been solid. This year is unlikely to see a recession, which is a good thing “LPL Financial’s chief market strategist, Ryan Detrick, stated.
The unemployment rate remained unchanged at 3.6% in the month, while average hourly earnings increased 0.3% against forecast of a 0.4% rise. Ten of the 11 major S&P sectors declined, with energy outperforming with a 1.5% gain as oil prices climbed on supply concerns.
“Oil is up again, continuing the inflationary worries that we are seeing and energy is bucking the trend of a very weak market. But the higher natural gas and crude oil prices have been tailwinds for the energy sector this year.” Detrick added Megacap growth stocks slipped, with a few exceptions including Apple Inc, which rose 0.7%. JP Morgan Chase slid 1% to lead losses among big banks.
The yield on the benchmark 10-year Treasury notes rose to 3.131% earlier in the session. Most traders are expecting a 75 basis-point hike at the U.S. central bank’s June meeting, despite Fed chief Jerome Powell’s ruling that out.
The CBOE volatility index, a measure of investors’ anxiety, spiked to 31.41 points and the three major U.S. averages looked likely to register their fifth straight weekly decline, although with smaller losses than the prior week. At 2:01 p.m. ET, the Dow Jones Industrial Average fell 245.43 points, or 0.74%, to 32,752.54, the S&P 500 lost 34.12 points, or 0.82%, to 4,112.75.
The tech-heavy Nasdaq slipped 1.4% in choppy trading, adding to a near 5% drop in the previous session. Under Armour Inc slumped 24.5% after the sportswear maker forecast downbeat fiscal 2023 profit. Shares of rival Nike Inc slipped 4.8%.
Coinbase Global Inc dropped 10% on Friday to the lowest level since the cryptocurrency exchange’s 2021 stock market debut. Declining issues outnumbered advancing ones on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 3.12-to-1 ratio favored decliners. The S&P 500 posted one new 52-week high and 61 new lows; the Nasdaq Composite recorded 13 new highs and 717 new lows.
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