Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

S&P 500 Ends Week Lower After 'Colossal Miss' in Jobs Report

Published 03/12/2021, 21:20
Updated 03/12/2021, 21:20
© Reuters.

© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 closed lower for the second-straight week Friday, as investors weighed up a "colossal miss" in job gains for November at a time when the Federal Reserve looks likely to step up the pace of monetary policy.    

The S&P 500 fell 0.8%, the Dow Jones Industrial Average slipped 0.17%, or 59 points, the Nasdaq fell 1.9%. The major averages ended off the session lows.  

“It was a colossal miss,” Darren Schuringa, CEO of ASYMmetric ETFs said in an interview with Investing.com on Friday, referring to weaker-than-expected job gains in November. “When I look at these numbers now, it is concerning for me from an economic strength standpoint.”

Nonfarm payrolls increased 210,000 in November, well below economists’ expectations for 550,000 new jobs.

Still, a deeper dive into the monthly jobs report pointed to signs of the strength in the labor market. The unemployment rate fell more than expected to 4.2% as the labor force participation rate rose 0.2% to 61.8% last month.  

While the weakness in hiring “could complicate the discussion at the Federal Reserve … [Fed] officials seem to be leaning toward faster monetary policy normalization in response to high inflation,” Desjardins said in a note.

Technology stocks were among the hardest hit, though pared some intraday losses.

Microsoft  (NASDAQ:MSFT) fell nearly 2%, while Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), and Google-parent Alphabet (NASDAQ:GOOGL) were down about 1%.

Chip stocks also exacerbated the selling in the broader tech as Nvidia (NASDAQ:NVDA) slipped more than 4% after the Federal Trade Commission sued to block its proposed $40 billion takeover of chipmaker ARM Holdings (LON:ARM), citing competition concerns.

“[W]e see the FTC's decision to sue to block the deal as almost certainly ending the chances of any acquisition,” Wedbush said in a note.

DocuSign (NASDAQ:DOCU), meanwhile, plunged 42% after its softer fourth-quarter guidance suggested the e-signature company is unlikely to sustain its pandemic-fueled growth.

In other news, Peloton Interactive  (NASDAQ:PTON) gave up earlier gains and followed the market lower despite Deustche Bank issuing a buy rating on the stock amid expectations that a hybrid approach to fitness – at home and at the gym – is a possibility.

“[W]e think the hybrid work model extends to fitness, too, and that PTON [Peloton] has plenty of momentum to regain operationally,” Deutsche Bank said in a note.

Financials, meanwhile, were pushed lower by a slump in banks as the Treasury yields fell sharply, with the 10-year yield falling below 1.4%.

SVB Financial (NASDAQ:SIVB), First Republic (NYSE:FRC), Citizens Financial (NYSE:CFG) were sharply lower as falling yields tend to keep a lid on net interest income generated by banks.

The slump in Treasury yields come as investors flag concerns about the outlook for the economy as the Fed appears ready to step up monetary policy tightening at a time when the new omicron variant could threaten growth.

Yet, if the new variant turns out to be less impactful than feared and supply chain woes continue to ease, the broader market could resume its trend higher. 

"If the borders remain open, and supply chain [problems] continue to unravel, then that would support the markets moving higher from here," Schuringa said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.