© Reuters. FILE PHOTO: The Nasdaq logo appears on the Nasdaq Markets website in New York, USA, May 2, 2019. REUTERS / Brendan McDermid
By Sinéad Carew, Devik Jain and Anisha Sircar
(Reuters) – Wall Street’s three major stock indices ended lower Friday after a solid job report eroded hopes of a break in the Federal Reserve’s aggressive tightening of policies needed to cool decades of high inflation.
The technology-heavy Nasdaq led to the declines and fell 2.5% as the shares of the market heavyweights Apple Inc (NASDAQ 🙂 and Tesla (NASDAQ 🙂 Inc were the biggest moves in the market.
Earlier, the Labor Department’s closely monitored report showed that non-agricultural wages rose by 390,000 jobs last month, while wages rose while unemployment remained stable at 3.6% – all signs of a tight labor market.
Economists polled by Reuters had predicted that non-agricultural wages would rise by 325,000 jobs.
While the job report was reassuring for the current economy’s situation, investors focused primarily on its potential impact on central bank policy.
“The market is trying to channel its response through what the Fed may or may not do,” said Nela Richardson, chief economist at ADP, who expects the market to continue to fluctuate due to uncertainty about interest rates and inflation.
Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, saw the solid report as a double-edged sword.
“It tells us that the economy is in fairly good shape, which is good news, but when viewed in the context of what it means for the Federal Reserve and a tightening of monetary policy, it probably makes them more confident that they can continue. with tightening, “he said. “It’s coming through as a bit negative for investors because they’re hoping the Fed stops later this year.”
The money markets fully price 50 basis point rate hikes from the Fed in June and July.
While the May report’s slower-than-expected rise in hourly earnings looked like good news for inflation, Snyder cited rising oil prices as a compensatory factor.
It dropped 348.58 points, or 1.05%, to 32,899.7, it lost 68.28 points, or 1.63%, to 4,108.54, and it dropped 304.16 points, or 2.47%, to 12,012. 73.
Among S & P’s 11 major sectors, consumer goods were the weakest with a decline of 2.9% followed by a decline in technology of 2.5%. The energy index, which rose 1.4%, was the only winner in the herd as oil prices rose. [O/R]
For the week, the S&P 500 fell 1.2%, while the Nasdaq fell 0.98% and the Dow lost 0.94% after all three indices had risen sharply the week before.
Volatility has gripped Wall Street in recent weeks as investors debated whether markets had hit bottom, amid some haughty comments from Fed officials and data suggesting inflation may have peaked.
“For right now, the economy looks OK. And the labor market as a signal of the real economy on Main Street looks incredibly solid,” ADP’s Richardson said, adding that she sees inflation as “a threat to those prospects”, even though it may have peaked.
“The peak is less relevant than the persistence of inflation and rising interest rates,” she said. “That’s why wages in this report were so significant. While wage growth may not be driving inflation above the peak, it may play a strong role in keeping inflation around these higher levels much longer than anyone wants or predicts.”
IPhone maker Apple ended with a 3.9% drop after a bearish brokerage outlook and a report that EU countries and lawmakers next week would agree on a common charging port for mobile devices and headphones – a proposal Apple has criticized .
Tesla shares fell 9.2% after CEO Elon Musk in an email to executives seen by Reuters said he has a “super bad feeling” about the economy and has to lay off about 10% of jobs at the electric car maker .
Meanwhile, after the markets closed, Russell was to unveil an early list of index members as part of its annual reconstitution aimed at reflecting changes in the wider market.
Falling issues exceeded the number of advances on the NYSE by a ratio of 2.68 to 1; on the Nasdaq favored a ratio of 1.79 to 1 folders.
The S&P 500 posted 1 new 52-week high and 29 new lows; The Nasdaq Composite recorded 32 new highs and 88 new lows.
On US stock exchanges, 9.42 billion shares changed hands on Friday compared to the average of 12.89 billion for the last 20 sessions.