Stocks declined early on Friday as a result of an unexpectedly robust monthly jobs report and weaker-than-anticipated financial results from some of the nation’s largest technology giants.
In early morning trade, the S&P 500 fell 45 points, or 1.1%, to 4,135 and was down 1.1%. The Dow Jones industrials dropped 121 points, or 0.4%, to 33,933 and the tech-heavy Nasdaq sank 1.8% after Apple, Amazon, and Alphabet reported disappointing quarterly results after Thursday’s market closure.
Employers in the United States added a stunning 517,000 jobs in January, despite the Federal Reserve’s vigorous efforts to restrict growth and manage inflation with higher interest rates.
The unemployment rate reached a fresh half-century low of 3.4%.
Numerous technological businesses have recently announced massive layoffs, but the government’s weekly report on unemployment benefits released on Thursday indicated that layoffs are not as widespread as previously believed. The number of applicants for unemployment benefits decreased last week, reaching its lowest level since April. There are approximately two jobs available for every unemployed American.
Andrew Hunter, senior U.S. economist with Capital Economics, stated in a research that despite most leading indicators of recession flashing red, the economy is not as near to a recession as we had believed.
According to the most recent employment statistics, the information industry, which encompasses many technological companies, lost 5,000 jobs, the same amount as in December.
John Leer, chief economist at Morning Consult, stated prior to the release of the employment figures that while the IT industry plays a disproportionate role in increasing productivity and corporate earnings, it still represents a very tiny portion of total employment. Many of these individuals who are being let go are being rehired and reabsorbed somewhere.
Since the beginning of the year, stocks have risen on expectations that the U.S. Federal Reserve may soon stop raising interest rates. Such increases contribute to the eradication of inflation, but also increase the cost of borrowing for firms and people, which slows the economy.
Tech businesses were riding high on Thursday, riding the coattails of Facebook’s parent company, Meta, which soared 23% after disclosing late Wednesday that its revenue above Wall Street’s modest estimates and announcing a $40 billion stock repurchase.
Apple revealed its first quarterly revenue loss in nearly four years, Amazon reported a worse-than-expected fourth-quarter earnings, and Alphabet, the parent company of Google, reported a 34% decline in profit. A few hours before Friday’s opening bell, the shares of the three companies were down between 2.6% and 3.6%.
The Federal Reserve raises rates for the eighth consecutive time at 00:22
The yield on the 10-year Treasury, which helps determine interest rates for mortgages and other major loans, decreased to 3.40 percent late Wednesday from 3.42 percent. The two-year yield, which fluctuates based on Fed predictions, remained unchanged at 4.10 percent.
In energy trading, the price of U.S. crude slid 13 cents to $75.75 a barrel on the New York Mercantile Exchange. Brent crude, the worldwide benchmark, fell 21 cents per barrel to $81.96 in London.
»Stocks tumble following strong January jobs number«