A third consecutive week of losses was recorded by the main stock indices of Wall Street, which also lost the opportunity to “scissor” the fall, as they finally lost the battle on a daily basis on Friday, closing in the “red”, despite the initial upward trend they registered .
Upbeat but broadly consistent labor market data did little to change the prevailing view among investors that the US Federal Reserve will move aggressively to raise interest rates to tame galloping inflation.
More specifically, during the day, the industrialist Dow Jones lost 337.58 points, or 1.07%, to 31,318.84, with the broader S&P 500 to record losses of 42.59 points or 1.07%, at 3,924.26 points and the technological Nasdaq to record a drop of 154.26 points or 1.31%, to 11,630.86.
In weekwhile the Dow lost 2.99%, the S&P 500 lost 3.28%, and the Nasdaq fell 4.21%.
The indices not only turned into the “red” but moved emphatically downwards after the release of data on the positions “added” by the US economy in August (315,000 against a forecast of 318,000).
According to Steve Sosnick, chief strategist at Interactive Brokers, when it comes to the labor market, the data shows “not overheating, but not freezing in the economy. The situation is consistent with forecasts. There is nothing in the data to take away from the table a 75 basis point interest rate hike by the Fed”.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted for his part that “more workers are coming into the economy, and I think that’s a positive thing, given how many jobs are vacant right now. The glimmer of hope for the economy, if any.” one, is the jobs.
In other macro data, orders for manufactured goods fell 1 percent in July, according to the U.S. Commerce Department, versus forecasts for a 0.2 percent increase. It was the first decline after nine months of continuous growth.
US government bond yields also moved lower after the announcement of the employment data.
That of the 2-year American bond lost 12 basis points, to 3.41%, while that of the 10-year lost seven bp. to 3.19%. The biggest drop in the 2-year is likely a sign that traders expect less aggressive monetary tightening from the Fed.
The energy sector was the best performer for the day among the S&P 500, with gains of 2%.
The investment climate was probably also affected by the news about the complete cessation of Russian gas flows to Europe via the Nord Stream 1 pipeline;which were supposed to start again on Saturday, citing a technical fault, as Northern Trust Asset Management’s chief investment strategist for North America, Chris Shipley, said.
Natural gas is “hugely important in assessing the economic outlook in Europe as we head into winter,” Shipley noted. A recession in the Old Continent “would be negative for the investment climate, especially regarding high-risk assets, on a global scale.”
Among the 30 Dow stocks, only 3 moved in a positive direction and 27 in a negative direction. Profits were recorded by those of Chevron, Salesforce, Walgreens Boots Alliance, while the losses were led by those of 3M, Honeywell International and Procter & Gamble.
USA: The economy added another 315,000 jobs in August, unemployment at 3.7%
The U.S. economy continued to add new jobs in August, although the pace slowed compared to the previous month, while wages continued to move upward, government data released today showed.
In particular, jobs in the economy increased by 315,000 last month, after the rise of 526,000 jobs in July, as the US Department of Labor announced today. July’s reading was revised slightly lower than the original figure of 528,000.
The unemployment rate, meanwhile, rose to 3.7% from 3.5% as the labor force participation rate strengthened. The participation rate climbed to 62.4% from 62.1%.
The average estimate of analysts in a Bloomberg poll was for 300,000 jobs, with unemployment remaining at 3.5%.
Hourly wages rose 0.3% in August to $32.36, with overall growth over the past year reaching 5.2%, among the biggest increases since the early 1980s.
The latest data belies concerns that the slowing economy and fears of an impending recession will lead US businesses to freeze new hires.
The data also appears to pave the way for the US Federal Reserve to raise interest rates again in September.
The strong job market is easing concerns about the risk of a recession, allowing the Fed to raise interest rates further to rein in the highest inflation in 40 years. Analysts, however, warn that with successive and large increases in interest rates, the risk of recession increases.