February 8, 2023

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U.S. Stocks Pull Back Sharply As Strong Jobs Data Offsets Hopes Of Fed Slowdown

2 min read

Stocks moved sharply lower during trading on Friday, largely offsetting the rally seen over the course of the previous session. The major averages all showed notable moves to the downside, with the tech-heavy Nasdaq showing a particularly steep drop.

The major averages finished the session near their worst levels of the day. While the Nasdaq plunged 304.16 points or 2.5 percent to 12,012.73, the S&P 500 tumbled 68.28 points or 1.6 percent to 4,108.54 and the Dow slumped 348.58 points or 1.1 percent to 32,899.70.

With the pullback on the day, the major averages all moved lower for the holiday-shortened week. The Dow slid 0.9 percent, the Nasdaq shed 1 percent and the S&P 500 dove 1.2 percent.

Traders cashed in on Thursday’s strong gains, as stronger than expected jobs data offset the faint hopes that the Federal Reserve might slow its planned pace of interest rate hikes.

The Labor Department’s closely watched monthly employment report showed job growth in the U.S. exceeded economist estimates in the month of May.

The report showed non-farm payroll employment jumped by 390,000 jobs in May after surging by an upwardly revised 436,000 jobs in April.

Economists had expected employment to increase by about 325,000 jobs compared to the addition of 428,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate remained unchanged at 3.6 percent. The unemployment rate was expected to edge down to 3.5 percent.

The report also showed average hourly earnings rose by $0.10 or 0.3 percent to $31.95 in May. The annual rate of wage growth slowed to 5.2 percent in May from 5.5 percent in April.

“The May employment report underscores Chairman Powell’s view of the labor market still being extraordinarily tight despite some moderation in wage growth,” said Kathy Bostjancic, Chief U.S. Economist at Oxford Economics.

She added, “As such, today’s report supports the Fed raising the fed funds rate by 50bps at each of its June and July…

2022-06-03 16:12:04

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