The jobs report looked good. Wall Street wasn’t happy about it

US stocks fell broadly on Friday and dragged major indexes in the red for the week as Wall Street focused on the still-strong job market decline.

A report showed that employers hired more workers last month than economists expected. While that’s a good sign for the economy amid worries about a possible recession, many investors have noticed that the Federal Reserve is keeping the Federal Reserve on track. continued to increase interest rates strongly. Such moves would slow the economy in the hope of eventually easing high inflation, and the Fed risks triggering a recession if it moves too quickly or too far. Meanwhile, higher interest rates put downward pressure on stocks and other investments.

The S&P 500 index fell 68.28 points, or 1.6%, to 4,108.54. It was a reversal from Thursday’s market movements, when a narrower report on the US jobs market came out weaker than expected. That reinforced speculation that the Fed might consider pausing rate hikes later this year, and hopes of a less aggressive Fed sent stocks soaring.

Friday’s slide also dragged the benchmark S&P 500 index into its eighth weekly decline in the past nine weeks. The exception to that time period was last week, when stocks spiked in part on speculation that the Fed would consider pausing rate hikes in September.

The Dow Jones Industrial Average fell 348.58 points, or 1%, to 32,899.70. Nasdaq fell 304.16 points, or 2.5%, to 12,012.73.

Bitcoin also fell, while anxiety levels in the stock market increased, although some half-hearted signals for inflationary pressures were buried in the jobs data.

The US government’s comprehensive report Friday showed that employers added 390,000 jobs last month, better than expectations of 322,500. That sent Treasury yields up, although they fluctuated initially as investors moved from one knee to another after the report was released.

Yields on the two-year Treasury note, which tend to vary with expectations of Fed action, rose to 2.68% from 2.62% just before the report was released. The 10-year yield, which tracks expectations for long-term growth and inflation, rose to 2.95% from 2.91% after peaking at 2.99% previously.

The report contained a number of signals that analysts say could ultimately make the Fed less aggressive. Major daily reversals have become the norm lately as Wall Street struggles to gauge how aggressive the Fed is.

Average wages for workers in May were weaker than economists expected. While that discourages those who see grocery and gasoline prices rising above their wages, it could mean less pressure on inflation across the economy going forward. Plus, the nation’s job growth decelerated last month, even if it was better than expected.

“The employment situation remains steady for the economy, but there are some signs of slowing down,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “The signs aren’t clear and convincing enough to suggest the Fed needs to pause, but a lot could change in the next few months.”

More than 4 out of 5 stocks in the S&P 500 fell amid rising rate anxiety, with the heaviest losses being in technology stocks and other big winners of the formerly low rate world.

Tesla fell 9.2% after US safety regulators said more than 750 owners had complained about their cars suddenly stopping on the road for no reason while operating on the steering system. their part automatic car. A report also said Tesla is considering layoffs amid chief executive Elon Musk’s concerns about the economy. Because Tesla is the fifth largest company in the S&P 500, Tesla’s activities have a heavier impact on the index.

Companies as diverse as Walmart and Delta Air Lines have recently warned of how inflation is ingrained in their profits, which has increased pressure on the market as stock prices tend to track returns in the long term. term. These warnings are overriding market worries about Russia’s invasion of Ukraine and about anti-COVID measures slowing business in China.

“There is a lot of uncertainty,” said John Lynch, chief investment officer at Comerica Wealth Management. “You can’t put Ukraine on the spreadsheet, and you can’t put a key in China on the spreadsheet.”

JPMorgan Chase CEO Jamie Dimon said earlier this week that he was bracing his company for a possible economic “storm”, highlighting less economic support from the US government and the Federal Reserve, as well as the war in Ukraine.

https://www.latimes.com/business/story/2022-06-03/stocks-sink-jobs-report The jobs report looked good. Wall Street wasn’t happy about it

Edmund DeMarche

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