Stock futures fall, Treasury yields rise as Wall Street weighs jobs data

U.S. stocks fell early Friday as the government’s key jobs reading showed the labor market grew at a slower pace in September.

The American Economy added 263,000 jobs last month when the unemployment rate fell to 3.5%. Economists expected a payroll gain of 255,000 and an unemployment rate of 3.7%.

Futures contracts linked to the S&P 500 (^GSPC) fell 0.7%, while futures on the Dow Jones Industrial Average (^ DJI) lost more than 100 points, or 0.4%. Nasdaq Compound (^IXIC) futures led the decline, down 1.3%. Meanwhile, in the bond market, Treasury yields soared, with the benchmark 10-year note jumping 7 basis points to 3.90% and the 2-year yield up 8% to 4.32% .

Shares closed previous trade lower for a second consecutive day after a blistering two-day rally weakened. Still, the major averages remain firmly off the 2022 lows and are poised to end the week on a positive note.

Investors are betting that signs of a labor market slowdown will force Federal Reserve policymakers to change course on their aggressive rate hike path, especially after a series of weaker economic releases showed a decline in manufacturing activity and fewer job offers. But many Wall Street strategists have argued that hopes of an imminent pivot are premature.

In recent research notes, JPMorgan analysts said stock bulls would need monthly payrolls as low as 100,000 to see the market change its Fed expectations, while Bank of America analysts said said a pivot won’t happen “until the payroll stings”.

“The Fed’s job is still far from done: expect hikes to continue until negative payrolls are almost in hand,” noted a BofA team led by the strategist. in research on Meghan Swiber rates.

Moreover, Federal Reserve officials themselves have sent a clear message in recent weeks that there are no plans so far to back out of aggressive policy intervention.

“We need to go further,” Chicago Federal Reserve Chairman Charles Evans said Thursday, noting that benchmark rate will likely be 4.5% to 4.75% by spring 2023.” “Inflation is high right now and we need a tighter monetary policy framework. “

WASHINGTON, DC – JULY 26: Construction workers look on outside the Marriner S. Eccles Federal Reserve Building on July 26, 2022 in Washington, DC. (Photo by Anna Moneymaker/Getty Images)

U.S. crude oil futures continued their ascent this week on the heels of the biggest OPEC+ production cut since 2020. DataTrek Research noted that West Texas Intermediate (WTI) crude at over $85 per barrel will extend positive energy inflation trends through at least early 2023 The firm also noted that oil prices are an “underappreciated pivot issue” for the Federal Reserve and market expectations in short-term economic growth. WTI futures were trading around $89 a barrel early Friday.

Elsewhere in the markets, chipmakers were under pressure Friday morning after Advanced Micro Devices (AMD) lowered its revenue forecast for the third quarter and warned of “significant” inventory fixes in the PC supply chain. Shares were down about 6% premarket. Weighed also on the sector Samsung announces its first profit drop since 2019another sign of a struggling flea market.

Levi Strauss (LEVI) was also a driver on Friday after the retailer cut its forecast, citing headwinds from a stronger dollar, slowing consumer demand and continued supply chain snafus. The stock was down about 5% in trading before the bell.

Meanwhile, DraftKing’s actions (DKING) jumped nearly 8% after Bloomberg News reported on Thursday that ESPN was approach of an important new partnership agreement with the sports betting company, citing sources familiar with the deal.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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