By Robert Brand
US stocks pared losses as dip-buyers emerged after a strong labor-market report and weak tech earnings sparked a rout in risk assets. Treasuries remained lower.
The S&P 500 all but erased a drop that topped 1% at the open and futures on the index cut overnight declines by more than three-quarters. Apple Inc. erased the heavy losses it suffered in late trading on Thursday following a weak earnings report and pushed higher for a fourth session. Amazon.com Inc. and Alphabet Inc. fell on poor results.
Wall Street’s feel-good start to the year looked set on continue Friday, even after a strong jobs report bolstered speculation the Federal Reserve can remain aggressive in its battle against inflation. The S&P 500 is up more than 2% in the week after a torrid January rally. Slower wage growth tempered anxiety over the central bank’s policy path, and a strong reading on the services sector added to evidence the economy remains resilient in the face of higher interest rates.
Treasury yields climbed, with the two-year rate rising more than 15 basis points. A dollar index rose after a gauge of US services topped estimates, underscoring strength in consumer demand.
Here’s what Wall Street is saying about the jobs report:
Seema Shah, chief global strategist at Principal Asset Management:
“It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”
Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc. :
“This is a big pushback to the slowing. This is a reminder of what Powell tried to say to the market — though the market wasn’t listening — that their main concern is they’re not yet seeing the impact of their tightening in the labor markets.”
John Leiper, chief investment officer at Titan Asset Management:
“There is a huge disparity between market pricing and the commentary coming from central banks. Yes, you could make the case that Jerome Powell was a little more dovish than expected but he was very clear that his intention is to keep rates higher for longer until the job is done, and that simply isn’t the case yet. Today’s employment data might catalyse a reversion in this apparent dichotomy.”
Neil Dutta, head of US economic research at Renaissance Macro Research:
“Consumers are telling you that the labor markets are fine and that unemployment is low. So if you don’t want to take the BLS’s word for it, maybe we can just take the American consumer’s word for it.”
Ronald Temple, chief market strategist at Lazard:
“The inflation battle is far from over. The labor market is extremely tight – today’s release indicates the lowest unemployment rate since 1953. The clear takeaway for the Fed should be that financial conditions remain too loose to ensure inflation will return to the 2% target. While wage gains show few signs of accelerating, persistent labor market tightness combined with the loss of real wages since the pandemic is highly likely to lead to increased wage demands over time.”
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.4% as of 10:31 a.m. New York time
- The Nasdaq 100 fell 0.6%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.9%
- The euro fell 0.5% to $1.0852
- The British pound fell 1% to $1.2107
- The Japanese yen fell 1.7% to 130.92 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to $23,597.85
- Ether rose 1.8% to $1,666.04
Bonds
- The yield on 10-year Treasuries advanced 16 basis points to 3.55%
- Germany’s 10-year yield advanced 14 basis points to 2.22%
- Britain’s 10-year yield advanced eight basis points to 3.09%
Commodities
- West Texas Intermediate crude rose 2.7% to $77.93 a barrel
- Gold futures fell 2% to $1,891.40 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Peyton Forte and Robert Brand.
More stories like this are available on bloomberg.com.
