U.S. Finish Volatile Session In The Red After Jobs Report

Stocks saw substantial volatility during trading on Friday, as traders digested the Labor Department’s closely watched monthly jobs report. The major averages spent the day showing wild swings back and forth across the unchanged line.

The major averages eventually finished the day in negative territory. The Dow fell 150.27 points or 0.4 percent to 35,065.62, the Nasdaq declined 50.48 points or 0.4 percent to 13,909.24 and the S&P 500 slid 23.86 points or 0.5 percent to 4,478.03.

For the week, the Dow slumped by 1.1 percent, the S&P 500 tumbled by 2.3 percent and the Nasdaq plunged by 2.9 percent.

The volatility on Wall Street came after the Labor Department released a report showing employment in the U.S. increased by less than expected in the month of July.

The report said non-farm payroll employment climbed by 187,000 jobs in July after rising by a downwardly revised by 185,000 jobs in June.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.5 percent in July from 3.6 percent in June. Economists had expected the unemployment rate to remain unchanged.

The Labor Department also said average hourly employee earnings increased by $0.14 or 0.4 percent to $33.74 in July.

Annual wage growth came in at 4.4 percent in July, unchanged from June. Economists had expected the pace of growth to slow to 4.2 percent.

Following the mixed report, most economists still expect another pause in interest rate hikes by the Federal Reserve next month, although the data has led to some uncertainty about the outlook for rates beyond that.

“With the labor market very strong, wages rising solidly, and core inflation well above the Fed’s target, odds are better than 50-50 that the Fed makes another quarter percentage point rate hike in the second half of 2023, most likely at the Fed’s November 1 decision,” said Bill Adams, Chief Economist for Comerica Bank.

He added, “That would have the Fed skipping a rate hike at the next decision in September, like they did in June, in recognition that interest rates are probably near the peak for this cycle.”

Among individual stocks, shares of Amazon (AMZN) moved sharply higher after the online retail giant reported better than expected second quarter and provided upbeat revenue guidance for the current quarter.

On the other hand, shares of Apple (AAPL) saw notable weakness after the tech giant reported fiscal third quarter earnings that beat analyst estimates but a continued decrease in revenues.

Sector News

Tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 2.6 percent.

Considerable weakness also emerged among utilities stocks, as reflected by the 1.2 percent drop by the Dow Jones Utility Average. The average fell to its lowest closing level in over four months.

Meanwhile, telecom stocks held on to substantial gains, resulting in a 9.4 percent spike by the NYSE Arca North American Telecom Index. The index jumped to a three-month closing high.

Telephone and Data Systems (TDS) and United States Cellular (USM) both skyrocketed after each decided to initiate a process to explore strategic alternatives for UScellular.

Retail stocks also saw notable strength following Amazon’s upbeat results, moving higher along gold and housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index climbed by 0.6 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index advanced by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index rose by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries have shown a significant rebound after moving sharply lower in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.5 basis points at 4.074 percent.

Looking Ahead

Inflation data is likely to move into the spotlight next week, with separate reports on consumer and producer prices potentially having a significant impact on the outlook for interest rates.

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