Stocks dip after mixed December jobs report

Stocks edged lower Friday morning as investors digested a key report on the U.S. labor market recovery at the end of a volatile week. The S&P 500, Dow and Nasdaq declined. 

Investors mulled the Labor Department’s December jobs report released Friday morning, providing an update on the extent to which labor supply shortages were still impacting the economy at the end of last year. A disappointing 199,000 jobs came back during December, unexpectedly slowing compared to the previous month. Other metrics, however, were more upbeat, as the unemployment rate improved to a fresh pandemic-era low of 3.9%, and the labor force participation rate steadied after an upward revision in November. Still, many economists cautioned that a more recent hit to the labor market from the surge in Omicron cases may not yet have been. captured in the December report. 

Heading into this print, U.S. stocks have come under pressure over the past couple sessions as investors reassessed the next likely moves by the Federal Reserve. With policymakers closely watching for signs that the economy has reached maximum employment, the jobs report could provide additional fodder for the Fed to double down on its more hawkish tilt, some pundits said. 

“This is a green light for March,” Neil Dutta, head of U.S. economics at Renaissance Macro Research, wrote in an email Friday morning, referring to the timing of an initial rate hike from the Fed. “The U3 unemployment rate plunged 0.3ppt [percentage points] to 3.9%, 0.4ppt below the Fed’s Q4 2021 estimate and only 0.4ppt above the Fed’s estimate for year end 2022. Average hourly earnings are coming in firm as the labor force participation rate remains flat.” 

The Fed’s December meeting minutes released earlier this week suggested some officials were inclined to speed their asset-purchase tapering and move up the timing of an initial interest rate hike from current near-zero levels. And in a surprise development to many market participants, some officials also suggested they were contemplating the start of reducing the nearly $9 trillion in assets on the central bank’s balance sheet. Such a move would quickly shift the markets away from the accommodative monetary policy backdrop that helped underpin risk assets during the pandemic. 

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“The way I view it is very simple: The Fed delivered a wonderful year for markets in 2021, at the cost of a much more complicated outlook in 2022,” Mohamed El-Erian, president of Queens’ College at Cambridge University and Allianz Chief Economic Adviser, told Yahoo Finance Live on Thursday. “And that complicated outlook is for policy, is for the economy, and therefore is a more uncertain outlook for markets.” 

“This is still a very robust economy,” he added. “If we avoid a policy mistake — big if. But if we avoid a policy mistake, this economy has all the ingredients to continue growing and grow in a more inclusive manner. But we do need help on labor force participation and productivity. We do need help on the supply side.”

And despite this week’s volatility, some pundits struck an upbeat tone about future near-term catalysts for the market. 

“Within the U.S., we’re hopeful for fourth-quarter earnings. We think [they] should be fairly good,” Rob Haworth, U.S. Bank Wealth Management senior investment strategist, told Yahoo Finance Live on Thursday. “That said, the market does have to adjust to what is a surprise in terms of how aggressive the Federal Reserve may be in managing the economy around inflation.”

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9:31 a.m. ET: Stocks open lower after jobs report 

Here’s here markets were trading just after the opening bell Friday morning: 

• S&P 500 (^GSPC): -3.36 (-0.07%) to 4,692.69

• Dow (^DJI): -84.89 (-0.23%) to 36,151.58

• Nasdaq (^IXIC): -15.78 (-0.14%) to 15,059.67

• Crude (CL=F): -$0.02 (-0.03%) to $79.44 a barrel

• Gold (GC=F): +$3.90 (+0.22%) to $1,793.10 per ounce

• 10-year Treasury (^TNX): +1.7 bps to yield 1.75%

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7:18 a.m. ET Friday: Stock futures extend gains

Here’s where markets were trading ahead of the opening bell Friday morning: 

• S&P 500 futures (ES=F): +7.25 points (+0.15%), to 4,694.75

• Dow futures (YM=F): +3 points (+0.01%), to 36,126.00

• Nasdaq futures (NQ=F): +45.50 points (+0.3%) to 15,805.5

• Crude (CL=F): +$0.51 (+0.64%) to $79.97 a barrel

• Gold (GC=F): +$2.80 (+0.16%) to $1,792.00 per ounce

• 10-year Treasury (^TNX): -0.6 bps to yield 1.727%

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6:31 p.m. ET Thursday: Stock futures drift ahead of jobs report

Here were the main moves in markets during the overnight session:  

• S&P 500 futures (ES=F): +9.5 points (+0.2%), to 4,697.00

• Dow futures (YM=F): +57 points (+0.16%), to 36,180.00

• Nasdaq futures (NQ=F): +45.25 points (+0.29%) to 15,804.25

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter