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Market Snapshot: Dow drops 360 points after jobs data, after steepest fall since 2020

U.S. stocks traded lower early Friday, extending losses after the biggest daily drop since 2020 on Thursday as investors weigh April jobs data amid heightened stagflation fears.

How are stock-index futures trading?

The Dow Jones Industrial Average
DJIA,
-1.22%

fell 352 poitns, or 1.1%, to 32,645.

The S&P 500
SPX,
-1.50%

was down 52 points, or 1.3%, at 4,094.

The Nasdaq Composite
COMP,
-1.91%

shed 227 points, or 1.8%, to 12,091.

On Thursday, the Dow industrials slumped 1,063.09 points, or 3.1%, its worst daily percentage drop since Oct. 28, 2020, according to Dow Jones Market Data. The S&P 500 fell 3.6%, while the Nasdaq Composite tumbled 5% for its worst daily percentage fall since June 11, 2020.

What’s driving markets?

The U.S. economy added 428,000 new jobs in April, but an acute labor shortage showed little improvement last month, which could underline worries about inflation already running its hottest in 40 years. Economists polled by The Wall Street Journal had forecast 400,000 new jobs.

The unemployment rate was unchanged at 3.6%, the government said Friday, just above a 54-year low. Average hourly earnings cooled, rising 0.3% versus expectations for a 0.4% increase.

The jobs report “has something for everyone…steady job gains supporting economic growth with less wage pressure, possibly easing inflation fears,” said John Lynch, chief Investment officer for Comerica Wealth Management.

“Investors need confidence that the Fed won’t raise too aggressively and topple the economy into recession in their fight against inflation. Today’s report is balanced and may prove to dampen the extreme volatility of recent days,” he wrote.

Investors will also hear Friday from New York Fed President John Williams, and after the market close, St. Louis Fed President James Bullard and Fed Gov. Chris Waller. In between, consumer credit data for March is ahead Friday.

Major indexes are set to end the week largely unchanged, which belies volatile action seen in recent days. Stocks surged Wednesday after the Federal Reserve delivered a widely expected half percentage point interest rate increase, and perceptions that the central bank may be less hawkish than perceived, but those gains reversed, and then some on Thursday.

See: Choppy stock market got you seasick? Investors don’t see smooth sailing soon

Some blamed Thursday’s sharp drop, in part, on a divided decision by the Bank of England to hike interest rates to the highest level since 2013, alongside a grim economic forecast, which was accompanied by a grim economic forecast.

Read: Why did the Dow plunge more than 1,000 points? Should I wait for stocks to sink lower? Here’s what some pros think.

A sharp drop in first-quarter U.S. productivity data and a rise in unit labor costs published Thursday were also cited as a factor, underlining stagflation fears.

See: Why the stock-market plunge was partly due to bad news on the inflation front

That rubs against the assertion by Powell and other senior Fed officials that they can achieve a so-called soft landing — lowering inflation without bringing economic growth to a grinding halt.

“What’s dangerous about yesterday’s huge market slump is that there must be an element of doubting the ability of there to be an effective ‘Fed Put’ in this cycle following a 30-40 year period where the central bank has almost always been able to come to the market’s rescue,” said a team of Deutsche Bank strategists led by Jim Reid.

Yields on 10- and 30-year Treasury bonds hovered at levels last seen in 2018, which they reached Thursday as stocks plunged. The 10-year yield
TMUBMUSD10Y,
3.059%

rose 4.5 basis points to 3.11%.

Which companies are in focus?

Shares of Zillow Group Inc.
Z,
-8.87%

fell 10.5% after the company blew past revenue forecasts but delivered a disappointing forecast late Thursday that reflected uncertainty facing the real-estate sector.

Shares of Cloudfare Inc.
NET,
-19.59%

were down 17.9% after the cybersecurity company’s quarterly results slightly beat Wall Street expectations, but its bottom-line forecast for the current quarter indicated a possible miss in its next report.

DoorDash Inc.
DASH,
-8.10%

shares rose fell 12% after the delivery-platform company topped revenue forecasts but posted a larger-than-expected drop.

Shares of World Wrestling Entertainment Inc.
WWE,
-4.74%

were up lost 1.1% after reporting earnings and revenue that beat expectations.

Block Inc.
SQ,
-4.77%

fell short on earnings and revenues, but gave upbeat signals about its Cash App business. Shares fell 2.8%.

How are other assets trading?

The ICE U.S. Dollar Index,
DXY,
-0.39%

 a measure of the currency against a basket of six major rivals, fell 0.3%.

Gold futures 
GC00,
+0.45%

rose, with gold for June delivery 
GCM22,
+0.45%

up 0.2% near $1,880 an ounce.

West Texas Intermediate crude for June delivery  
CLM22,
+0.64%

rose 1.2% to trade above $109.50 a barrel on the New York Mercantile Exchange.

Bitcoin 
BTCUSD,
-1.76%

fell 1.4% to trade near $36,000.

In European equities, the Stoxx Europe 600 
SXXP,
-2.33%

 dropped 1.7%, while London’s FTSE 100 
UKX,
-1.70%

 lost 1.2%.

In Asia, the Hang Seng Index HSI, -3.81% 
HSI,
-3.81%

slumped 3.8%, the Shanghai Composite Index 
SHCOMP,
-2.16%

 fell 1.7%,while the Nikkei 225 Index rose 0.6%.

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