Stocks Mixed, Yields Rise Following Blowout Jobs Report | national
NEW YORK (AP) — Stocks are mixed and Treasury yields jump Friday after a U.S. jobs report raised Wall Street expectations that the Federal Reserve will soon begin to hike sharply. interest rate.
The S&P 500 was up 0.2% in early trading after the Labor Department said employers added 467,000 jobs last month, triple forecasts of economists. Some economists even expected a loss of jobs amid the spike in coronavirus infections in January due to the omicron variant.
Higher rates would make it harder to invest in all markets, and most S&P 500 stocks were down. But a jump of 11.2% for Amazon following a strong earnings report, almost single-handedly, the index rose.
The Dow Jones Industrial Average was down 60 points, or 0.2%, at 35,050 as of 10 a.m. Eastern. The Nasdaq Composite was up 0.8% and smaller stocks on the Russell 2000 were down 0.4%.
Treasury yields jumped immediately after the release of the jobs report on expectations that the Fed will raise short-term interest rates more aggressively than expected. The two-year yield, which tends to move with expectations for Fed stocks, jumped to its highest level since the start of the pandemic and is more than double what it was two months ago. .
Most people expect the Fed to raise short-term rates next month from their all-time low of near zero, with the only question being how much. Friday’s jobs report now gives investors a nearly 29% chance of a 0.50 percentage point increase, instead of the traditional 0.25 points. That’s more than double the probability Wall Street predicted a day earlier.
Any increase would mark a sharp turnaround from most of the past two years, when ultra-low rates drove up prices for everything from stocks to cryptocurrencies. Higher rates make it harder to invest in any market because when bonds pay more interest, investors feel less of a need to seek out risky things to earn returns.
Strong January hiring numbers appear to support the Fed’s belief that the economy is strong enough to withstand an interest rate hike. The report also seems to underscore how inflation remains a problem.
The average hourly wage of workers jumped 5.7% in January from a year earlier. This is an acceleration from the 5.2% rise in December, despite economists’ expectations of a slowdown. While such increases are attractive to workers, higher wages can also fuel longer-lasting inflation than if gasoline or other commodity prices were to rise alone.
Inflation has already hit a nearly four-decade high, and the Fed’s main tool to bring it down has been to raise rates.
Wall Street has been shaky over the past month as investors have taken action to try and outrun a Fed that will not only raise interest rates but also remove other supports put in place to prop up markets and l ‘economy.
Stocks considered the most expensive have been hardest hit by the reorganization of Wall Street, such as tech and internet stocks which have soared during the pandemic hoping they can continue to grow regardless of the economy. .
But even there, uncertainty still reigns as some tech companies have reported explosive earnings that seem to show them as good buys even as interest rates rise, while others like Facebook’s parent company stumbled.
Amazon joined the list of early adopters after announcing stronger results for its latest quarter than analysts expected. Because it’s one of the biggest stocks on Wall Street by market value, its movements have an outsized effect on the S&P 500 and other indexes.
Parent Snapchat Break climbed nearly 48% and Pinterest gained nearly 7% following its own earnings reports.
Facebook’s parent company fell another 1.3% a day after wiping more than $230 billion from its market value, by far the biggest one-day loss in history for a US company.
AP Business Writer Elaine Kurtenbach contributed.
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