US stock indexes extended losses for a second day on Friday as US Treasury yields rose on hopes of a rise in stocks following strong jobs data as investors feared big interest rate hikes to cushion rising prices.
The Labor Department reported an increase of 428,000 jobs in non-farm payrolls in April, while economists polled by Reuters had expected an increase of 391,000 jobs.
The unemployment rate remained unchanged at 3.6% for the month, while average hourly earnings rose 0.3% against forecasts of 0.4% growth. The data underscored strong fundamentals of the economy, despite a contraction in GDP in the first quarter.
Jason Pride, chief investment officer for private property at Glenmead, said: “There are no big surprises from today’s jobs report – it largely confirms that the labor market remains tight, prompting the Fed to deal with its price stability mandate. gives flexibility.”
“Wage growth slowed and fell below expectations… but a month so far hasn’t turned out to be enough of a trend for the Fed to slow its monetary toughening intentions.”
Nine of the 11 major S&P sectors declined in early trade, with the consumer discretionary sector down 1.7%.
The tech-heavy Nasdaq slipped 1.6%, down nearly 5% in the previous session, as investors feared major rate hikes could be announced as inflation hits a four-decade high.
Traders see a 75% chance of an increase of 75 basis points at the Fed’s June meeting, despite Fed chief Jerome Powell dismissing it.
Megacap growth stocks Google-parent Alphabet Inc., Apple Inc., Microsoft Corp., Meta Platforms, Tesla Inc. and Amazon.com fell between 0.1% and 1.8%.
The yield on the benchmark 10-year Treasury note rose to 3.131%.
When bond yields rise, the returns and valuations of interest rate sensitive growth stocks are discounted more deeply.
The Cboe volatility index, a measure of investor concern, rose 3.74 points to 34.94, as the three key averages looked to close out their fifth straight weekly decline.
At 10:08 am, the Dow Jones Industrial Average was down 375.98 points, or 1.14%, at 32,621.99, the S&P 500 was down 55.62 points, or 1.34%, at 4,091.25 and the Nasdaq Composite was down 192.64 points, or 1.56. %, at 12,125.06.
The S&P 500 growth index was down 21.7% year-on-year, compared to a 6.1% drop in its value counterpart, which has economy-sensitive sectors such as energy, banks and industry.
Under Armor Inc fell 24.3% after the sportswear maker’s full-year profit fell 24.3% as it grapples with a hit to its business from higher transportation costs and renewed COVID-19 restrictions in China.
Shares of rival Nike Inc slipped 5.4%.
The number of decline issues outweighs advisors for the 5.51-to-1 ratio on the NYSE. Issues decline in the number of advances to a 4.73-to-1 ratio on the Nasdaq.
The S&P index posted a new 52-week high and 58 new lows, while the Nasdaq posted 9 new highs and 598 new lows. (Reporting by Devik Jain in Bengaluru; Editing by Sriraj Kalluvilla and Shinjini Ganguly)