US stocks were left fuming on Friday after a key jobs report came in hotter than expected.
Checking back in on the S&P 500 (^GSPC) around 1 p.m. ET, the index turned 1.5% into the red, while the Dow Jones Industrial Average (^DJI) fell 1.2%. Contracts with the technology-heavy Nasdaq Composite ( ^IXIC ) fell 1.8%.
Bond yields fell. The yield on the benchmark 10-year US Treasury note fell to 3.71% on Friday.
Wall Street digested two major events in the financial world on Friday: the jobs report and the growth story of Silicon Valley Bank, which became the largest financial institution to fail since the 2008 financial crisis.
Friday’s February jobs print once again blew past expectations, with the U.S. economy adding 311,000 jobs, a slower pace from January’s explosive number and compared to economists’ consensus estimate for job gains of 225,000. The unemployment rate rose to 3.6%, and wage growth rose 4.6% on an annual basis, slower than expected.
“Going to first principles. Labor markets are undeniably strong. Over the past three months, non-farm payrolls have averaged 351,000,” Neil Dutta, chief economist at Renaissance Macro Research, wrote in a report.
“Full-time employment has risen by an average of 442,000 per month this year. I can see why the soft-landing bulls are running, especially given today’s report on the increase in the participation rate and the slowdown in wage growth (mostly a mixed story). “Can’t. Terminal charges are still going up. Oh, and weather, time to hit the mute button on people talking about an imminent recession. – The landing story is a hoax,” he added.
Notable job gains were in leisure and hospitality, retail, government and health care, while employment lagged in information, transportation and warehousing. According to the Bureau of Labor Statistics.
The Federal Reserve is keeping a close eye on all fronts for the labor market as the central bank tries to reduce inflation. While other recent government data pointed to the economy picking up steam, February’s jobs print revealed tepid hiring. Economists looked to the payrolls release as a report that would show whether the hiring gain was an outlier or the start of an economic acceleration.
A flurry of economic data, along with comments from Chairman Jerome Powell this week, have fueled debate over whether a 0.25% or 0.50% rate hike from the central bank is possible for the March meeting.
As stated therein CME FedWatch tool, Market participants are betting that the Federal Reserve will raise rates by a quarter-point at its next meeting.
However, recent events in the banking world have raised other concerns for central bank officials as their monetary tightening policy puts pressure on the banking system.
On Friday, US banking regulators took control of Silicon Valley Bank after the lender failed to raise new capital. Treasury Secretary Janet Yellen said Friday that she is monitoring a handful of banks amid the crisis at Silicon Valley Bank.
The bank’s share price fell 68% during Friday’s premarket trading session.
Sour sentiment pervaded markets as the KBW Bank Index ( ^BKX ) fell more than 2%, while index members including Bank of America ( BAC ) and JPMorgan Chase ( JPM ) rebounded during midday trading on Friday. Shares of First Republic Bank (FRC) fell 51% and the stock was halted on volatility. Other regional bank stocks, including PacWest Bancorp, Western Alliance Bancorp and Signature Bank, have also been suspended.
In other single-stock moves, Albert’s ( BIRD ) shares tumbled 46% after the shoemaker posted a disappointing quarterly earnings report that revealed a double-digit drop in sales and a $101 million annual loss. There is a leadership shakeup, with Chief Financial Officer Mike Bufano leaving the company.
Shares of DocuSign ( DOCU ) fell 19% after JPMorgan analysts downgraded the stock, citing disappointing demand prospects. Despite the revenue and earnings beat, CFO Cynthia Gaylor announced her resignation this year.
Elsewhere in the cryptocurrency market, Bitcoin (BTC-USD) fell below $20,000 on Friday amid the Silvergate Capital (SI) liquidation and regulatory pressure on the industry.
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Danny Romero is a Yahoo Finance reporter. Follow her on Twitter @daniromerotv
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