Stocks fall as Wall Street eyes downside to strong jobs data

NEW YORK (AP) — U.S. stocks tumble Friday as Wall Street focuses on the decline in the still-strong U.S. jobs market.

The S&P 500 was down 1.5% in midday trading after a report showed employers were hiring more workers last month than economists expected.

While this was a good sign for the economy amid concerns about a possible recession, many investors saw it keeping the Federal Reserve on course for higher interest rates. aggressively. Such moves would slow the economy in hopes of bringing down high inflation, and the Fed risks triggering a recession if it moves too quickly or too far. Meanwhile, rising interest rates put downward pressure on stocks and other investments.

The Dow Jones Industrial Average was down 286 points, or 0.9%, at 32,957 as of 11 a.m. Eastern Time, and the Nasdaq composite was down 2.4%. Bitcoin also fell, while some concern in the stock market rose, although some signs of half-full inflationary pressures were buried in jobs data.

This is a reversal of market moves from Thursday, when a closer report on the US jobs market was weaker than expected. That bolstered speculation that the Fed might consider a pause in rate hikes later this year, and hopes of a less aggressive Fed sent stocks surging.

Friday’s fuller report from the US government showed employers added 390,000 jobs last month, better than expectations of 322,500. That drove Treasury yields higher, although they initially faltered then that investors went from one knee-jerk reaction to another after the report was released.

The two-year Treasury yield, which tends to move with expectations of Fed action, rose to 2.67% from 2.62% just before the report was released. The 10-year yield, which tracks longer-term growth and inflation expectations, rose to 2.96% from 2.91% after hitting 2.99% earlier.

The report contained some signals that analysts said could ultimately cause the Fed to be less aggressive, and the mixed data could lead markets to swing through Friday. Large daily reversals have become the norm recently as Wall Street struggles to cripple the aggressiveness of the Fed.

Average worker wages were a bit weaker in May than economists had expected. While this is disheartening for people watching grocery and gas pump prices climb more than their paychecks, it could mean less future pressure on inflation across the economy. Additionally, the country’s job growth slowed last month, although it was better than expected.

“The jobs picture remains strong for the economy, but there are signs of a slowdown,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “The signs aren’t clear and convincing enough to suggest the Fed needs to pause yet, but a lot can change over the next few months.”

More than four out of five stocks in the S&P 500 fell amid concerns over rising rates, with the heaviest losses hitting tech stocks and other big gainers in the world at earlier low rates.

You’re here fell 8.5% after US safety regulators said more than 750 owners complained about cars suddenly stopping on the roads for no apparent reason while using their partially automated driving systems. A report also says Tesla is considering layoffs amid CEO Elon Musk’s worries about the economy. Because Tesla is the fifth-largest company in the S&P 500, its moves weigh more heavily on the index.

Companies from Walmart to Delta Air Lines have recently warned that inflation is eating away at their profits, adding pressure to markets as stock prices tend to follow earnings over the long term. Warnings add to market concerns over Russia’s invasion of Ukraine and on China’s business slowdown and anti-COVID measures.

JPMorgan Chase CEO Jamie Dimon said earlier this week that he was preparing his company for a possible economic “hurricane”, pointing to less economic support from the US government and the Federal Reserve, as well as the war in Ukraine.

Wall Street’s benchmark index is heading for its eighth weekly loss in the past nine. The outlier in this period was last week, when stocks roared in part on speculation that the Fed would consider a pause in rate hikes in September.

European stock markets were little changed on Friday, with Germany’s DAX down 0.1% and trading closed in London for a bank holiday.

Markets were also closed in China for the Dragon Boat Festival, a national holiday. Benchmarks elsewhere in Asia rose.

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AP Business Writer Yuri Kageyama contributed.

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