Markets Fall as Huge Job Gains Fuel Rate Hike Worries

U.S. equities tumbled after the Labor Department reported the U.S. added hundreds of thousands more jobs than expected last month, raising speculation that the Fed will keep up its aggressive monetary tightening policy to fight inflation without fear of dragging down the labor market. As stocks fell, bond yields skyrocketed in anticipation of even higher interest rates.

Despite the selloff, the S&P 500 and Nasdaq were up entering the new month. For the week, the S&P 500 added 1.6%, and the Nasdaq continued its strong 2023 start, climbing 3.3%. The Dow slipped 0.2%.

Stocks that are sensitive to interest rates declined in Friday’s session. Tech stocks, which become less attractive when borrowing costs increase, lost ground. Amazon (AMZN) and Alphabet (GOOGL) added to the negative feeling after they reported slowing sales, and their shares dropped. Shares of semiconductor companies fell. Shares of Home Depot (HD), Lowe’s (LOW), and home builders slipped on worries higher rates will hurt the housing market.

Ford (F) missed profit estimates, and CEO Jim Farley expressed frustration with the company’s performance, saying it could have made $2 billion more in 2022. Shares sank. Computer security provider Gen Digital (GEN) was the worst-performing stock in the S&P 500 following the release of its quarterly earnings. Gold prices tumbled, and so did shares of Newmont Corporation (NEM) and other gold miners.

Apple Shares Up

Apple (AAPL) was a bright spot in the tech sector, as its shares advanced after the iPhone maker had an increase in paid subscriptions across its services. Tesla (TSLA) shares gave up big early gains but still finished up for the eighth session out of nine. The carmaker was helped by a Biden administration decision on electric vehicle tax credits. 

Clorox (CLX) raised its full-year profit guidance, and shares of the household products maker jumped. Indications that activist investor Ryan Cohen has taken a major stake in Nordstrom (JWN) sent shares of the upscale retailer soaring almost 25%.

Oil futures took off in the morning, then reversed course and were down 3.5%. The U.S. dollar rose against the euro, pound, and yen. Most major cryptocurrencies traded lower.