Dow loses more than 600 points as rates climb after September jobs report
Shares fell on Friday as traders gauged the September jobs report, which showed the jobless rate continued to fall and triggered a rise in interest rates.
The Dow Jones Industrial Average fell 670 points, or 2.3%. The S&P 500 lost 2.9%, while the Nasdaq Composite slipped 3.8%.
Friday’s jobs figures showed the US economy added 263,000 jobs in September, slightly below a Dow Jones estimate of 275,000. However, the unemployment rate came in at 3, 5%, compared to 3.7% the previous month, a sign that the employment situation continues to strengthen even as the Federal Reserve tries to slow the economy with rate hikes to stem inflation.
“While the data was roughly in line with expectations, the decline in the jobless rate is apparently what the markets are obsessed with because of what it means for the Fed,” said Peter Boockvar, chief investment officer of Bleakley Financial. “When combined with the low level of initial jobless claims, the pace of layoffs remains subdued and that, of course, motivates the Fed to continue its aggressive rate hikes.”
The drop in the jobless rate caused rates to jump, in turn weighing on futures. The 2-year Treasury yield rose 5 basis points to 4.302%. (1 basis point equals 0.01%).
Shares of Advanced Micro Devices fell after the chipmaker warned that its third-quarter revenue would come in lower than expected. Shares of Levi Strauss slid following a reduction in guidance.
Friday’s losses pared gains in what started off as a big comeback week for equities. Major averages are still on pace to end the week higher, but have returned most of the gains from the rally that started the week. The Dow Jones is heading for a weekly gain of 1.8%, while the S&P is on track to end the week up 1.4%. The Nasdaq is poised to rise 0.7%.
“The conclusion that many people we spoke to came to is that not only will the Fed not help the markets, but in its relentless pursuit of price stability, it will continue until something breaks. in capital markets,” said Christopher Harvey, equity analyst at Wells Fargo. Securities. “What appears to be their increasingly singular goal – price stability – will likely help catalyze dislocation.”