Stocks on Wall Street fell in opening trading on Friday after the U.S. jobs report beat expectations, as investors weighed the possibility that it could influence the Federal Reserve’s consideration of whether to maintain or raise interest rates.
The Dow Jones Industrial Average (^DJI) fell 0.3%, or about 90 points, after major indexes rebounded on Thursday. The S&P 500 (^GSPC) lost 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) lost 0.5%.
September’s labor market data did not show the predicted signs of a slowdown in the labor market. The US economy added 336,000 jobs in September, almost twice as many as expected. This could provide the Fed with further evidence that the labor market remains strong, which supports tighter policy longer term.
Friday’s data is the last major payroll report before the central bank’s next policy meeting.
Read more: What the Fed’s pause on rate hikes means for bank accounts, CDs, loans and credit cards
The Fed is also watching bond markets, as Fed official Mary Daly said Thursday that policymakers may not need to raise interest rates again if long-term bond yields remain at current levels. The rapid rally in yields continued on Friday following the jobs announcement, with 10-year U.S. Treasury yields (^TNX) rising back above 4.8%.
According to some analysts, the bond sell-off could well continue as there is no clear trigger to stop the bleeding. They believe that a decline in stock prices or a slowdown in the economy would trigger a decline in yields.
Growth concerns weighed on oil prices, which are expected to post their biggest weekly loss since March due to a weakened demand outlook. WTI crude oil futures (CL=F) rose after falling below $82 a barrel on Friday, while Brent crude futures (BZ=F) rose to surpass the key $84 level .
Stock trends in morning trading
Here are some of the stocks topping Yahoo Finance’s Trend Ticker page in morning trading on Friday:
Pioneer Natural Resources (PXD): Shares of the shale oil producer rose more than 10% on Friday morning after reports that oil giant Exxon Mobil would complete a blockbuster deal to acquire the company in a deal worth about $60 billion.
Levi Strauss (LEVI): The apparel company fell 0.83% after reporting that sales fell short of expectations and lowering its full-year sales forecast.
Taiwan Semiconductor (TSM): Shares rose more than 1% after the company reported a smaller-than-expected decline in sales, boosted by demand for AI and other advanced chips. Taiwan Semiconductor produces chips for Apple, Nvidia and other technology companies.
Tesla (TSLA): Shares of Tesla fell over 2% on Friday morning after the company again cut prices for its Model 3 compact sedan and Model Y SUV. The U.S. Securities and Exchange Commission is also suing the company’s CEO, Elon Musk, to force him to testify about his actions related to the purchase of Twitter, now called X.
Stunning jobs report reinforces Fed’s stance to ‘rise higher and longer’
The blockbuster jobs report for September released on Friday came in almost double what economists had predicted. The strong balance sheet provided another data point showing the economy is more resilient than many expected, even in the face of an aggressive tightening campaign by the Federal Reserve.
Experts say the strong labor market suggests the Fed will raise interest rates again, highlighting the need for the central bank to maintain elevated rates for an extended period of time.
“Friday’s jobs report suggests that the jobs report remains very strong and supports the case for another Fed rate hike this year. It also likely delays the pace of any rate cuts,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management . “Given the strength of the economy, investors will need to get used to longer-term higher interest rates.”
According to the CME FedWatch tool, the market is now forecasting a greater likelihood that the Fed will raise interest rates next month. Just a day before the jobs report, the forecast showed a 20 percent chance of a rate increase in November. That number rose to nearly 30% on Friday.
With job losses from the Fed’s previous rate hikes not piling up, some experts point to the increasing likelihood of a soft landing. “The robust job growth shows that there is some buffer to the Federal Reserve’s efforts to cool inflation without causing job losses,” said Daniel Zhao, senior economist at Glassdoor. “With the labor market in a stable holding pattern, we are one month closer to ending 2023 without a recession.”
Stocks open lower after blockbuster jobs report
More losses loomed in the first week of October after stocks plunged at the opening bell on Friday. Investors balked after the newly released September jobs report showed the U.S. economy added 336,000 jobs, dashing expectations of 170,00 new jobs. The latest jobs data fueled fears that the job market is not slowing as quickly as the Federal Reserve would like as it struggles to reduce inflation.
The S&P 500 (^GSPC) lost 0.5%, while the Dow Jones Industrial Average (^DJI) fell about 0.3%, or nearly 100 points. The tech-heavy Nasdaq Composite (^IXIC) fell about 0.5%.
Tesla, Activision Blizzard and Coca-Cola: Stock trends in premarket trading
Here are some of the stocks topping Yahoo Finance’s trend ticker page in premarket trading on Friday:
Tesla (TSLA): Tesla shares fell over 2%. Tesla once again cut prices for its Model 3 compact sedan and Model Y SUV.
Activision Blizzard (ATVI): Activision shares rose nearly 1% premarket. Microsoft is reportedly aiming to close its $69 billion deal for “Call of Duty” publisher Activision Blizzard on October 13.
Coca-Cola (KO): Shares of Coca-Cola rose nearly 1% premarket after falling the previous day. Shares of the carbonated drinks maker took a hit as attention turns to the effects of weight-loss drugs.
Nestlé (NESN.SW): Nestlé shares fell 3% on Friday. Shares of the food and beverage maker were under pressure as investors weighed the potential impact of weight-loss drugs and how they might reduce grocery spending.
MThis was also the case on the US labor market in September
The US labor market added 336,000 new jobs in September, almost double the 170,000 expected by Wall Street economists. This is a sign that the resilience of the labor market may continue to pressure the Federal Reserve to keep interest rates high or even raise them further.
The unemployment rate was unchanged at 3.8% in September as labor force participation remained stable compared to the previous month. A rise in labor force participation caused unemployment to rise in August.
Wage growth slowed slightly in September, with average hourly wages rising 4.2% from a year earlier, less than the expected 4.3% increase in August.
After that report, the chances of the Fed raising interest rates next month rose to about 29% from 20% on Thursday. We will be keeping a close eye on how these opportunities develop in the coming weeks, particularly in view of the inflation data due out next Thursday.
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Stock futures are rising, all eyes are on US payroll numbers
Major U.S. stock indexes were expected to open higher on Friday as investors awaited the release of the key monthly U.S. jobs report, which could set the tone for Federal Reserve policy.
S&P 500 futures (^GSPC) rose 0.24%, while Dow Jones Industrial Average (^DJI) futures gained 0.22%, or 74 points. Contracts on the tech-heavy Nasdaq 100 rose 0.28%.
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