Equities were generally on the back foot on Friday afternoon as Wall Street began coming to terms with the increasingly likely prospect of a December interest rate rise.
The Dow Jones pulled back around 45 points, 0.25%, to 17,818 while the S&P 500 dipped 0.4% to 2,090, meanwhile the Nasdaq moved higher to 0.11%.
Friday’s very strong US employment stats would, in themselves, indicate real world positives for America’s economy, but as it encourages the Federal Reserves to finally increase rates it also signals the beginning of the end of Wall Street’s cheap money.
The QE tap has already been turned off, but, historically low interest rates have continued to be the market’s elixir.
This morning’s influential non-farm payroll report for October massively beat market expectations, revealing 271,000 jobs were added to the US economy last month, versus forecasts for an 180,000 increase.
At the same time the unemployment rate reduced to 5%, from 5.1% in the preceding month, and it now stands at the lowest level since spring 2008.
Employment levels and the labor market are understood to be key in the Fed’s thinking so today’s report could end up being a fairly significant trigger.
A reflex analysis suggests the apparent improvement in the labor market will effectively rubber stamp the Federal Reserve’s intentions to increase interest rates before the year’s end.
“Ever since the October meeting, today’s jobs report was seen as one of two that could make or break the decision and based on the data, the decision suddenly looks pretty straight forward,” said Craig Erlam, analyst at broker OANDA.
Immediately after the news the US dollar strengthen in key currency pairings, while gold prices dropped and equity benchmarks softened.
In the stock market itself there were still a number of notable corporate stories and market movers.
Computer hardware maker Nvidia (NASDAQ:NVDA) jumped 15% to $31.77 after it sales that may exceed analysts’ estimates on demand for its hardware.
Youku Tudou (NYSE:YOKU), up 7.8% to $26.27, as it emerged the Chinese Internet TV firm will be bought by Alibaba (NYSE:BABA) in a deal worth around US$5bn.
And Shrek animator Dreamworks (NASDAQ:DWA) climbed 15.6%, to $23.43, after revealing a a better-than-expected third quarter.
Men's Wearhouse (NYSE:MW) plunged 44% 5o $22.37 after a profit warning. Current quarter earnings will fall considerably below prior estimates, it said, with same-store sales falling up to 25%.
Energy drinks maker Monster (NASDAQ:MNST) charged 15% higher as it too performed ahead of expectations.
It was, however, expectation that got the better of Tripadvisor (NASDAQ:TRIP), down about 9%, after the online vacation review and booking group reported 17% revenue growth – which was shy of market forecasts.