S&P 500 and Nasdaq Down 2% Ahead of Friday's Jobs Report

Barry Adams
09 Mar, 2023
New York City

Stocks lost early momentum and fell sharply as investors reviewed comments from the Fed chairman and jobless claims ahead of Friday's nonfarm payrolls data. 

The changing narrative on the rate path and the level of peak rates have lingered on for months but optimism prevailed on Wall Street that the Fed is ready to pause as early as this summer. 

Chairman Powell clarified that is simply not the case in his comments to lawmakers and investors, replacing the prospect of rate pause with retracing of aggressive rate hikes.

Higher-rates-for-longer theory is going to face its test on Friday after the release of nonfarm payrolls data before the opening of financial markets. 

Economists polled by Ticker.com are estimating net job gains of as much as 275,000 in February, sharply lower than the 517,000 increase in January which is widely seen as an anomaly. 

In other news, initial jobless claims in the last week rose to the most in 2023 and investors await a broader report on the state of the labor market and health of the economy. 

ADP's private payroll data and the Labor Department's monthly JOLT survey showed tight labor market conditions and resilient economy, raising worries that the Fed may have to raise faster to cool the economy that may be deemed too hot.  

 

Weekly Jobless Claims Advanced 

Initial jobless claims for the week ended March 4 surged by 21,000 from the previous week to 211,000, the U.S. Labor Department reported Thursday. 

The weekly claims were the highest in 2023 after tech layoffs accelerated. The four-week moving average which smoothes out the weekly volatility increased 4,000 to 197,000. 

Continuing claims ending in the previous week increased 69,000 to 1.72 million, the highest since January 2022.   

 

Indexes & Yields 

The S&P 500 index decreased 1.9% to 3,918.32 and the Nasdaq Composite index fell 2.1% to 11,338.35.

The yield on 2-year Treasury notes decreased to 4.87%, 10-year Treasury notes edged down to 3.91% and 30-year Treasury bonds fell to 3.85%. 

Crude oil fell 95 cents to $75.71 a barrel and natural gas fell 6 cents to $2.48 thermal unit. 

 

U.S. Stock Movers 

Silvergate Capital Corp fell 28.3% to $3.39 after the company said it plans to initiate the process of liquidating crypto-assets focused Silvergate Bank.   

SVB Financial Group plunged 38.9% to $163.43 after the company announced its plan to raise through a $1.25 billion common stock offering and $500 million depository receipts. 

MongoDB Inc declined to $211.45 after the database company offered weak revenue guidance. 

The company said revenue in the fourth quarter increased 36% to $361.3 million and net loss declined to $64.4 million from $84.4 million and diluted loss per share fell to 93 cents from $1.26 a year ago. 

The company guided full-year 2023 revenue in the range of $1.48 billion and $1..51 billion, indicating a slower revenue growth than in 2022. 

 Tesla Inc declined 0.6% to $180.83 on the news that federal safety regulators are looking to investigate what happened in a fatal collision involving a Tesla S model and a firetruck.  

 

European Markets Weigh Latest Corporate Results Against Higher Rates

Market indexes in Europe lacked direction after central bankers carried out hawkish rate hike campaign in the previous three days. 

Stocks struggled to shake off rate path worries as investors mulled the latest economic data. 

France's payroll growth slowed in the fourth quarter and the UK's housing market showed another month of weakness as buyers struggled with affordability.  

 

France's Payroll Growth Slows In Q4 

France's payroll increase slowed in the fourth quarter of 2022 driven by gains in the private sector, said the statistical office INSEE on Thursday. 

Payroll in the quarter increased 0.2% or 44,000 following the 0.3% rise or 84,100 in the third quarter. 

Private sector payroll employment was revised higher to an increase of 0.2% from the preliminary estimate of flat growth reported on February 8.  

On the other hand, public payroll was stable in the fourth quarter after a slight decrease of 0.1% in the third quarter. 

Temporary employment rose 1.1% in the fourth quarter after a 1.5% increase in the third quarter.  

 

UK Housing Markets Remains In Downward Trend 

The UK housing market remained in the downward trend after rising rates piled on higher cost of homes, the Royal Institute of Chartered Surveyors said in a report Thursday. 

The new home inquiry index improved to -29 in February from -45 in January, the best level since July 2022 and measure of new home sales recovered to -26 from -36 in January and time to sell a home approached 19 weeks. 

The weakness in the housing market is likely to persist for the next several months after the Bank of England showed a downward trend in mortgage approval to 39,600 in January from 40,500 in December.   

Higher home prices and higher rates are keeping many buyers away from the market. The Bank of England lifted its key lending rate by 390 basis points since the current tightening cycle began in December. 

 

Indexes & Yields 

The DAX index increased 1.34 points to 15,633.21, the CAC-40 index fell 8.88 points to 7,315.88 and the FTSE 100 index decreased 0.6% or 49.94 points to 7,879.98. 

The yield on the 2-year German Bund closed at 2.606%, French bonds at 3.13%, the UK gilts at 3.81% and Italian bonds at 4.38%. 

The euro inched up to close at $1.059, the British pound edged higher to $1.19 and the Swiss franc increased to 93.46 cents. 

Brent crude oil decreased 80 cents to $81.85 and the Dutch TTF natural gas increased Є1.26 to Є43.60 per MWh. 

 

Europe Movers 

Credit Suisse AG declined 1.9% to Sfr 2.62 after the troubled financial services provider delayed the publication of its annual report. 

Domino's Pizza Group PLC declined 8.9% to 260.0 pence after the company reported a decline in annual profit in 2022. 

Enel SpA was nearly unchanged after falling as much as 1.5% to Є5.32 and Italy's utility group agreed to sell its operations in Romania to Public Power Corp of Greece. 

Informa PLC rose as much as 2.5% before closing unchanged at 68.42 pence after the event management company agreed to acquire Tarsus Group from the private equity group Charterhouse Capital Partners for $940 million.  

Aviva Plc increased 2.8% to 462.50 pence after the insurance group agreed to allocate more capital to shareholders. 

The company declared a final dividend of 20.7 pence totaling annual dividend to 31.0 pence in 2022 and also announced a new stock repurchase program of £300 million.  

Revenue in the period increased to £2.7 billion from £2.2 billion and the insurance company swung to a loss of £1.1 billion from £2.0 billion and basic earnings per share was (38.2 pence) from 50.1 pence a year ago. 

Hugo Boss AG decreased 3.3% to €62.54 and the fashion apparel retailer said sales in 2022 increased 27% to record €3.7 billion. 

The luxury fashion retailer forecasted sales to rise "in the mid-single-digit percentage rate" in 2023.