Major Averages Trim Weekly Advance, Strong Dollar Fuels Global Inflation

Barry Adams
07 Oct, 2022
New York City

Benchmark indexes struggled on Wall Street and trimmed week's gain after September's jobs report raised fears of a large-sized rate hike at the next Fed meeting. 

The good news on the economy meant bad news for Wall Street as investors focused on the Fed action.

Traders on Wall Street focused on the decline in unemployment rate and worried that tight labor market conditions may force the Fed's policymakers to continue aggressive interest rate hikes. 

Popular indexes opened lower and drifted steadily downward until the final thirty minutes of trading and recouped some of the losses. 

Bond yields jumped in the early hours of trading and stayed elevated with 2-year Treasury notes crossing 4.3%, a 14-year peak. 

The yield on 2-year notes increased to 4.316%, 10-year notes advanced to 3.881% and 30-year bonds rose to 3.84%.

The S&P 500 index declined 2.8% to 3,639.66 and the Nasdaq Composite index dropped 3.8% to 10,652.40.

For the week, the S&P 500 added 1.5% and the Nasdaq Composite inched up 0.8%. 

For the year 2022, the S&P 500 index is down 24.1% and the Nasdaq Composite is lower a whopping 32.7%. 

Crude oil increased $4.55 to $93.05 a barrel and natural gas fell 31 cents to $6.67 a thermal unit.  

 

September Payrolls Rise 263,000

The U.S. economy added 250,000 jobs in September, lower than unrevised 315,000 in August, the U.S. Bureau of Labor Statistics reported Friday.

The shrinking pool of available workers also dragged down the unemployment rate to 3.5% from 3.7% in August, the Labor Department said.

Average monthly jobs added in 2022 edged down to 420,000, lower than 562,000 in 2021.

Before the release of the September month data, net new job additions averaged 439,000 in the first eight months of 2022, reflecting labor market strength and tight job market conditions.

With the September month job addition, the U.S. labor market is now about 500,000 larger than the pre-pandemic level.

Average hourly earnings increased 0.3% from the previous month and 5% from a year ago.  

 

U.S. Movers: Ambac, AMD, Credit Suisse, Levi's, Tilray  

Tech stocks led the decliners and the energy complex led the gainers. 

Apple Inc, Amazon.com, Inc, Meta Platforms Inc, Alphabet Inc and Netflix Inc plunged between 4% and 6%. 

Exxon Mobil, Chevron, Hess Corp and Schlumberger trade higher but reversed earlier gains to losses in the afternoon trading.  

Crude oil increased $3.45 to $92.35 a barrel and natural gas fell 10 cents to $6.87 a thermal unit.  

Advanced Micro Devices, Inc declined 11.3% to $60.27 after the chipmaker lowered its sales forecast on a weaker-than-expected personal computer market. 

Ambac Financial Group soared 15.5% to $14.75 after the municipal bond insurer agreed to a settlement with Bank of America for $1.8 billion linked to the insurance issued to the bank's subsidiary Countrywide Financial prior to its acquisition in 2008. 

Credit Suisse soared 13.8% to $4.88 after the financial service company said it plans to buy back $3 billion of its senior debt. 

Levi Strauss dropped 9.8% to $14.37 after the apparel maker lowered its full-year sales and earnings outlook. 

Tilray Inc plunged 18.8% to $3.17 after the cannabis company reported larger-than-expected loss and revenue missed analysts' estimate. 

Cannabis-related stocks surged in Thursday's trading after President Joe Biden announced grand pardon for those convicted of federal charges linked to marijuana possession. 

President Biden also ordered reviewing how marijuana is classified under federal drug laws. 

Aurora Cannabis, Canopy Growth Corp and Cronos Group plunged between 15% and 25%. 

 

European Markets Trim Weekly Gains 

European markets struggled in the morning trading and turned sharply lower after the U.S. economy added higher-than-expected jobs in September lifting rate hike worries. 

Benchmark indexes in Europe opened lower after weak economic reports from Germany and the U.K. and the sentiment weakened after the euro, the Swiss franc and the British pound eased.  

The DAX index fell 1.6% to 12,732.0, the CAC-40 index dropped 1.1% to 5,866.94 and the FTSE 100 index was nearly flat at 6,991.0. 

For the week, the DAX, the CAC-40 and the FTSE 100 indexes gained 1.3%, 1.5% and 1.2% respectively. 

The euro edged down to 97.62 U.S. cents and the British pounds declined to $1.109. 

The dollar also advanced against the Swiss franc to 99.31 U.S. cents. 

Brent crude oil jumped 3.2% to $97.25 a barrel and closed up 14.6% in the week, the best weekly gain since March. 

 

German Output and Retail Sales Drop  

German industrial output declined 0.8% in August after staying flat in July, Destatis reported Friday. 

Retail sales also fell 1.3% in August from the previous month and fell 4.3% from a year ago. 

In nominal terms, not adjusted for inflation, retail sales in August rose 0.1% from the previous month and increased 5.4% from a year ago. 

The difference between real and nominal sales data reflects the scale of price increase. 

The impact of inflation was also visible in imports and exports prices released by the Federal Statistics Office. 

 

German Import and Export Prices Surge 

Import prices surged 32.7% in August from a year ago and increased 4.3% from a year ago. 

Export prices jumped 18.6% in August from a year ago and gained 2.1% from the previous month.  

A private report also underscored the raging inflation in U.K. home prices. 

Home prices surged at a slower pace of 9.9% in August after 11.1% in July, the Lloyds Bank subsidiary Halifax reported Friday. 

Mortgage rates for two-year and five-year fixed-rates inched up above 6%, 14-year highs on the worries that the U.S. rate hikes are likely to push U.K. rates higher. 

 

Europe Movers: Adidas, J.D. Wetherspoon, Superdry

Adidas AG dropped 5.2% to