The S&P 500 and Nasdaq ended down on Friday, with the latest US jobs report underscoring investor worries that the Federal Reserve will aggressively hike interest rates to fight inflation.
Friday’s Labor Department data showed the US jobs market was at or near maximum employment even though employment rose far less than expected in December amid worker shortages.
On Wednesday, minutes of the Fed’s Dec. 14-15 policy meeting published showed officials at the US central bank viewed the labor market as “very tight,” and signalled the Fed may have to raise rates sooner than expected to curb inflation.
“The investor takeaway is that the labour market continues to be tight despite the headline miss,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“Investors are concerned the Fed will be more aggressive than expected.”
Consumer discretionary and and technology sectors led the way lower on the S&P 500 on Friday, while the S&P 500 financials sector and banking index extended recent gains.
Banks have been helped by rising US Treasury yields. The 10-year yield hit its highest since January 2020.
The S&P 500 lost 0.4 percent to end at 4,677 points, while the Nasdaq Composite lost 0.9 percent to 14,935. The Dow Jones Industrial Average fell 0.01 percent to 36,231.
Rising cases of the Omicron variant of the coronavirus also caused investor jitters this week.
Investors have been rotating out technology-heavy growth shares and into more value-oriented shares, which they think may do better in a high interest-rate environment. (Reuters)