Wall Street dropped sharply at the start of the new week, logging a four-day losing streak, as the prospect of higher interest rates continues to look likely.
At the close in New York, the main benchmarks were all off 1.0%. The Dow Jones (INDEXDJX:.DJI) fell 180 points to 17,730, the S&P 500 (INDEXSP:.INX) declined 21 points to 2,079 and the Nasdaq Composite (INDEXNASDAQ:.IXIC) gave up 52 points at 5,095.
Energy and consumer stocks were among those impacted worst whilst all sectors other than utilities saw red.
Friday’s (much) better than expected US jobs statistics are on the face of it a significant positive, in terms of the economy’s recovery, but, it also signals the beginning of the end for the era of very cheap money for the financial system.
The QE tap had already been turned off, but, historically low interest rates have continued to be the market’s elixir.
The 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.
Analysis suggests the improvement in the labor market will effectively rubber stamp the Federal Reserve’s intentions to increase interest rates before the year’s end.
In terms of corporate news there were a number of key highlights.
US shale driller Apache (NYSE:APA) was among the morning’s top risers, up more than 10%, after reports it had recently turned down an unsolicited takeover approach.
Another keen riser, also on M&A, was Plum Creek Timber which shot up 15% to US$46.73 following a deal to be acquired by real estate investment trust Weyerhaeuser (NYSE:WY).
Whilst Wall Street dealmakers are being kept busy with M&A, the IPO market also seems to rather healthy right now.
Tinder owner Match Group was in the spotlight on Monday after it priced its upcoming Nasdaq float, which raises US$537mln and values the whole company at more than US$3.4bn.
The float news comes on the back of strongly rising revenues and users – the Tinder mobile dating app alone is now expected to see 20mln daily users by the end of this year.
Warren Buffett’s Berkshire Hathaway (NYSE:NRK) was on the back-foot as its reinsurance businesses dented an otherwise positive looking third quarter. Notably investment gains relating to Kraft Heinz (NYSE:HNZ) helped boost profits in the quarter.
Elsewhere, car rentals group Hertz (NYSE:TZ) fell almost 12% after its quarterly performance stalled amid “currency headwinds”.
Later today, after the closing bell, Lions Gate Entertainment (NYSE:LGF) and Jamba Juice (NYSE:JMBA) are among those due release updates to the market.