Stocks Head for Weekly Losses on Rate Hike Concerns: Markets Overview

(Bloomberg) — Stocks fell, with major indexes headed for a third weekly decline after jobs data didn’t do much to change views about the Federal Reserve’s next policy move. Delays in the opening of a key gas pipeline to Europe also weighed on sentiment ahead of a three-day weekend for US markets.

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The S&P 500 was down as much as 1% in the afternoon. It rose as much as 1.3 percent after employers added 315,000 jobs last month, slightly above economists’ expectations. The two-year yield fell below 3.5% as the jobs report showed a slowdown in wage growth, potentially signaling some softening in labor demand.

The labor market data added to a batch of reports this week that backed up the Fed’s contention that the economy is robust enough to withstand more tightening. Risk assets have come under pressure since Fed Chairman Jerome Powell made it clear the central bank will raise rates further and keep them high until price growth slows. Despite the reassuring report, markets are still pricing in the likelihood of a three-quarters of a percentage point rate hike this month.

And in a huge blow to Europe, Russia’s Gazprom PJSC said its key gas pipeline to Europe could not reopen as planned on Saturday as a new technical problem was discovered. The news brings the region one step closer to blackouts, rationing and a severe recession.

Investors are already concerned that the European Central Bank is likely to raise interest rates by three-quarters of a percentage point next week. That, combined with curbs on natural gas supplies and escalating tensions between the U.S. and China, has investors worried, said Sam Stovall, chief investment strategist at CFRA Research.

Traders “don’t want to take extended long positions and thus potentially be exposed over the long weekend,” he said.

Worries that rising interest rates will hurt growth have already weighed on markets, pushing global bonds into their first bear market in a generation. Bloomberg’s global aggregate index of investment-grade government and corporate total returns is down more than 20% from its peak in 2021.

Some of the major moves in the markets:

Stock up

  • The S&P 500 was down 0.8% as of 3:06 p.m. New York time

  • Nasdaq 100 down 1.2%

  • Dow Jones Industrial Average fell 0.8%

  • MSCI world index fell 0.8%

Currencies

  • The Bloomberg Dollar Spot Index was down 0.2%

  • The euro rose 0.2% to $0.9967

  • The British pound fell 0.2% to $1.1518

  • The Japanese yen was little changed at 140.11 per dollar

Bonds

  • The yield on the 10-year note fell six basis points to 3.19%

  • Germany’s 10-year bond yield fell four basis points to 1.53%

  • Britain’s 10-year bond yield advanced four basis points to 2.92%

Goods

  • West Texas Intermediate crude rose 0.4% to $86.99 a barrel

  • Gold futures rose 0.9% to $1,725 ​​an ounce

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