S&P 500 Down Third Week In a Row, Nasdaq Falls 6th Day Straight

Barry Adams
02 Sep, 2022
New York City

On Wall Street investors welcomed the latest jobs report but caution prevailed in the afternoon trading. 

The morning surge slowly dissipated and benchmark indexes closed down, extending losses for the third week in a row as investors debated the health of the labor market. 

For the week, the S&P 500 index declined 3.3% and the Nasdaq Composite fell 4.2%. 

Non-farm payrolls increased 315,000 in August following the 526,000 additions in July, the Bureau of Labor Statistics said Friday. 

In a broad-based hiring employers added positions across many industries. 

Professional and business services including computer and system design led the job gains in the month with 86,000, followed by healthcare services with 48,000, retail trade with 44,000 , leisure and hospitality with 31,000 and manufacturing with 22,000. 

Leisure and hospitality sector additions slowed down considerably after adding an average of 90,000 for the last seven months. 

The unemployment rate increased to 3.7% and average hourly wages increased 0.3% from the previous month and 5.2% annually. 

Historically August jobs data are volatile and in the past the statistics agency has revised the data substantially. 

The BLS lowered the job additions in June to 293,000 from the previous estimate of 398,000 and July additions to 526,000 from 528,000.  

Employers, corporations and governments at all levels, added 315,000 net new jobs in August, slower than the revised 526,000 increase in July. 

The job growth was slowed but still solid and the gains were across many sectors in the economy, bolstering the case that the next U.S. rate hike may be moderate 50 basis points and not large 75 basis points as many had anticipated. 

With more people returning to the job market, the labor participation rate increased to 62.4% from 62.1% in July. 

The S&P 500 index decreased 1.1% to 3,924.26 and the Nasdaq Composite index fell 1.3% to 11,640.86. 

The S&P 500 index dropped to a nearly 4-week low and the Nasdaq declined for the sixth session in a row. 

Oil prices rose in the U.S. and European trading ahead of the OPEC+ meeting on Monday. 

Prices rose on the expectations that the cartel will announce production cuts at the gathering of finance ministers. 

Futures of crude oil increased 48 cents to $87.09 a barrel and natural gas fell 37 cents to $8.89 a thermal unit. 

The yield on 10-year Treasury notes  declined to 3.19% and on 2-year notes eased to 3.39%. 

 

European Markets Jump On Smaller Rate Hike Hopes 

European markets traded higher after the release of the U.S. payrolls report. 

In choppy trading on Friday, benchmark indexes in the region accelerated gains after the U.S. reported a slowdown in payrolls additions. 

The softer but solid jobs data lifted market indexes in New York and powered the rally in Europe. 

The DAX index increased 3.3% to 13,050.27, the CAC-40 index advanced 2.2% to 6,167.51, and the FTSE 100 index added 1.9% to 7,281.19. 

The euro held its parity with the U.S. dollar and the U.K. pound declined to $1.1506 ahead of the results of the Conservative party's leadership election on Monday. 

Producer prices, a measure of wholesale prices, in the euro zone rose 4% in July from the previous month, the eurostat report showed on Friday. 

The 4-month high increase was driven by the 9% surge in energy prices compared to 3% increase in June.  

On Thursday, Swiss Federal Statistics Office reported consumer price inflation index increased 3.5% from a year ago in August. 

The prices rose at a faster pace from 3.4% in July and accelerated to a 29-year high. 

On a monthly basis, prices rose 0.3% in August after staying flat in July.  

In stock trading, energy stocks led the gainers followed advances in technology stocks and banks. 

Deutsche Lufthansa gained 3.3% to 5.96 euros despite a one-day strike by pilots on Friday. 

GEA Group increased 1.9% to 32.95 euros and the food and beverage company said it is planning to invest 70 million euros in Germany to build a pharmaceutical technology center. 

Air Liquide increased 1.1% to 123.92 euros after the company confirmed its plan to exit from Russia. 

Ashmore Group fell as much as 4% but closed up 8.8% to 210.80 pence after the U.K.-based asset manager reported a decline in fiscal 2022 earnings. 

 

Caution Prevails In Asia

Asian markets marginally lower ahead of the U.S. jobs report as more cities tighten restrictions to prevent coronavirus outbreak from spreading. 

Shanghai index increased fractionally and indexes in Japan and India declined marginally after volatile trading.