4:22pm: Major benchmarks each lost ground
The Dow closed Friday 349 points, 1.1%, at 32,900, the Nasdaq lost 304 points, 2..7%, to 12,013, and the S&P 500 dropped 68 points, 1.6%, to 4,109.
All three benchmarks ended the week lower despite stronger than expected job data from May. Total non-farm payroll employment rose by 390,000 in May, exceeding the consensus analyst expectation of 325,000 jobs, according to the US Bureau of Labor Statistics.
“Good news is bad news. … It reminds us that the Fed is still the swing factor, at least in investor emotion,” Mark Hackett, Nationwide’s chief of investment research, said, as reported by CNBC.
12.05pm: Wall Street a sea of red
US stocks continued their downward spiral at noon on Friday after May jobs growth beat estimates.
At midday, the Dow had shed 325 points at 32,923, while the S&P 500 was down 67 points at 4,110 points.
The tech-heavy Nasdaq also took a beating, down 293 points at 12,024 points.
ING chief international economist James Knightley said the tight US jobs market would keep 50 basis point interest rate hikes coming from the Fed.
He noted that the US economy added more jobs than expected in May, but with nearly two job vacancies available for every unemployed American the numbers would have been even stronger if there was a better supply of quality labor.
“A tight jobs market with worker shortages and rising pay is both a constraint on growth and will keep inflation higher for longer,” he said.
“This means there is nothing in this report to deter the Federal Reserve from their roadmap of 50 basis point hikes at the June and July FOMC meetings, especially with GDP likely to rebound at around a 4% annualized rate in the second quarter based off decent consumer spending, investment and trade data.”
Meanwhile, Tesla Inc (NASDAQ:TSLA) shares were down about 8% at noon after reports CEO Elon Musk said he would cut 10% of jobs at the electric carmaker over a “super bad feeling” about the economy.
9.35am: May employment exceeds expectations
US stocks fell on Friday morning as US employment figures for May came in above analyst expectations highlighting the country’s continued tight labor market.
Just after the open, the Dow had shed 241 points or 0.7% at 33,007 points.
The S&P 500 was down 43 points or 1% at 4,134 points and the Nasdaq sunk 190 points or 1.5% at 12,127 points.
Total non-farm payroll employment rose by 390,000 in May, exceeding the consensus analyst expectation of 325,000 jobs, according to the US Bureau of Labor Statistics.
Notable job gains occurred across the leisure and hospitality, professional and business services, and transportation and warehousing sectors, while employment in retail trade declined.
Unemployment in May remained at 3.6% for the third month in a row.
Meanwhile, just after the open, shares of Tesla Inc (NASDAQ:TSLA) were down about 5% after the company’s CEO Elon Musk said in an email seen by Reuters that he had a “super bad feeling” about the economy and he would need to cut 10% of jobs at the electric carmaker.
6.30am: Lower open predicted
US markets were expected to open lower on Friday ahead of May’s non-farm payroll report, which will provide clarity on the state of the labor market and influence domestic monetary policy.
Analysts predict some 325,000 new non-farms jobs were added last month, with wage growth slowing to 5.2% from 5.5%. The figures are due out at 8.30am ET.
Futures for the Dow Jones Industrial Average fell 0.33% in pre-market trading, while those for the broader S&P 500 index lost 0.53%, and contracts for the Nasdaq-100 were down 0.95%.
Markets climbed overnight after the ADP private employment report, seen as a preview to the Bureau of Labor Statistics’ monthly employment report, showed a significantly lower-than-expected figure that meant the US economy added the lowest number of private jobs since the pandemic recovery began.
Traders cheered the figure, which meant the central bank could soften its approach towards soaring inflation or risk weakening the economy further.
However, Swissquote Bank senior analyst Ipek Ozkardeskaya believes the Fed will not change its stance based on the soft jobs data.
“Fed Vice Chair Lael Brainard has been clear that the Fed is unlikely to stop raising rates after the two 50 basis points hikes expected in the next two FOMC meetings,” she said.
“The era when the Fed threw money to the market to boost jobs is behind. We are in a new era. The era of high inflation, and the soft jobs will hardly stop the Fed from hiking the rates,” she added.
Meanwhile, OPEC’s announcement on Thursday that it will increase production by 50% disappointed markets, which had expected more structural increases from the cartel to cover Russia’s shortfall, said Jeffrey Halley, senior market analyst at Asia Pacific OANDA.
“Markets have passed judgment on the OPEC+ moves unequivocally and clearly believe they will have no meaningful impact on the global supply/demand imbalance,” he added.
In energy markets, WTI crude oil futures fell 0.62% to $116.14 a barrel and Brent crude futures lost 0.54% to $116.98.
Contact the author at jon.hopkins@proactiveinvestors.com