By Mark DeCambre, MarketWatch , Chris Matthews
Slowing job gains may reinforce view of a less-aggressive
Fed
U.S. stocks deepen their losses Friday afternoon as new jitters
on trade relations overshadowed the November employment report.
How are the benchmarks performing?
The Dow Jones Industrial Average fell 500 points, or 2.1%, at
24,425, the S&P 500 index is down 55 points, or 2.1%, at 2,640,
while the Nasdaq Composite Index traded down 184 points, or 2.6%,
lower at 7,002.
Check out:A death cross for the S&P 500 highlights a stock
market in tatters
(http://www.marketwatch.com/story/a-looming-death-cross-for-the-sp-500-highlights-a-stock-market-in-tatters-2018-12-06)
For the week, the Dow, S&P 500 and Nasdaq are set to show
declines of more than 4.5%.
Late Friday morning, both the S&P 500 and the Dow fell into
negative territory for the year, while the Nasdaq is clinging to a
1.2% advance year-to-date.
What's driving the market?
Concerns over global trade continue to weigh on investor
sentiment, even after a Friday morning report from the Labor
Department that showed healthy job gains for the U.S. economy and
the fastest pace of wage growth in nearly 10 years.
Despite efforts by the Trump administration and its Chinese
counterparts to paint an optimistic picture of ongoing negotiations
aimed at reducing trade tensions, investors are demanding more
evidence that the two sides will avoid the imposition of new and
expanded tariffs in 2019, market participants say. Once again, a
pair of administration officials gave opposing views about those
negotiations in separate television appearances Friday.
The effect of trade concerns on the markets can be observed in
sector-by-sector performance figures, as retail trade was the
sector taking the heaviest losses in the S&P 500 Friday
afternoon, down 5.9%, according to FactSet.
Read:Jobs report provides reason for Fed caution on interest
rates next year
(http://www.marketwatch.com/story/jobs-report-provides-reason-for-fed-caution-on-interest-rates-next-year-2018-12-07)
Retailers are particularly vulnerable to new tariffs, as
companies like Walmart Inc. (WMT) and Target Corp. (TGT) source
much of their merchandise from China. Walmart CEO Doug McMillon
told CNBC on Thursday
(http://www.marketwatch.com/story/walmart-ceo-warns-customers-might-pay-if-trade-tensions-escalate-2018-12-06)
that his company may soon have to raise prices if trade tensions
escalate.
Next week's vote on a deal covering Britain's exit from the
European Union as well as negotiations between Italy and the EU
over its budget deficit are also contributed to the risk-off
sentiment investors.
This is despite a relatively strong jobs report, which showed
that the U.S. economy adding 155,000 new jobs in November
(http://www.marketwatch.com/story/us-gains-155000-jobs-in-november-and-unemployment-rate-stays-at-37-2018-12-07),
the Labor Department estimated Friday morning, somewhat below
expectations of 190,000 new jobs, per a MarketWatch poll of
economists.
The jobs report also showed the unemployment rate holding steady
at 3.7%, as expected. Average hourly earnings grew 6 cents per hour
from October, or 0.2%, just shy of expectations, and grew by 3.1%
year-over-year, their highest rate since 2009.
Read:Softer-than-expected jobs report called uninspiring by
economists
(http://www.marketwatch.com/story/softer-than-expected-jobs-report-called-uninspiring-by-economists-2018-12-07)
The jobs numbers are of particular importance to investors, as
these data will inform The Federal Reserve's interest-rate-setting
committee, as it prepares to decide whether to raise interest rates
at its coming meeting Dec. 18-19.
Signs that the Federal Open Market Committee may take a less
aggressive tack in normalizing rates have increased, with The Wall
Street Journal on Thursday reporting that Fed officials are
considering a new wait-and-see mentality
(https://www.wsj.com/articles/restrained-inflation-reduces-urgency-for-quarterly-rate-increase-pattern-1544127856?mod=searchresults&page=1&pos=1)
at that December meeting. And nonvoter, St. Louis Fed President
James Bullard said he would advocate delaying a rate hike later
this month, during an interview.
Read:Huawei arrest creates concerns in Silicon Valley as well as
abroad
(http://www.marketwatch.com/story/huawei-arrest-creates-concerns-in-silicon-valley-as-well-as-abroad-2018-12-06)
What are market participants saying
"Today's is an exaggerated selloff," Vincent Juvyns, global
market strategist at J.P. Morgan Asset Management, told
MarketWatch. "But in the short term, there is just so much
uncertainty surrounding trade talks, Brexit and Italy," he
said.
"There's too much for investors to swallow at the moment,"
making it "not a good time to take bold risks," he said, adding
that his firm has recently increased his cash holdings in many
funds, even as they remain long U.S. equities, to help reduce risk
and ride out this troubled patch in the markets.
"The jobs report threaded the needle really well," J.J. Kinahan,
chief market strategist with TD Ameritrade told MarketWatch,
arguing that new jobs in November were neither too high nor too low
for investors.
"Had the this come in really hot, the market would have
interpreted it as a number that would force the Fed to raise rates
not just in December, but in March too," he said. "You also didn't
want to miss in a huge way on the down side, as it would have
shaken faith in the economy," he said.
Steve Chiavarone, portfolio manager at Federated Investors, told
MarketWatch that while the jobs report was bullish, trade concerns
will continue to weigh on the market in the short term.
On this top of his list of concerns is a recent decline in capex
spending that he says "is absolutely related to trade."
"Companies can't plan their global supply chains, with so much
uncertainty over where policy is going, and if you can't plan, you
can't invest," Chiavarone said. This dynamic will hurt the U.S.
economy, productivity growth and equity values if China and the
U.S. cannot come to some agreement that provides certainty around
the new rules of trade.
Which stocks are in focus?
Shares of Big Lots Inc.(BIG) are trading down more than 9%,
after wider-than-expected third-quarter loss.
Shares of Broadcom Inc. (AVGO) are in focus after the chip maker
announced fiscal fourth-quarter profits and sales Thursday evening
that topped Wall Street expectations. The stock is up 0.7%
Friday.
Ulta Beauty Inc. (ULTA) shares have slumped more than 10%
Friday, after a Thursday evening earnings release that predicted
weaker holiday sales that analysts hoped.
Shares of Altria Group (MO)are in focus after the company
announced it would take a 45% ownership stake in the cannabis-firm
Cronos Group Inc. (CRON.T), worth $1.8 billion. The stock is up
0.6%, while Cronos shares are surging more than 22% on the
news.
What other data and Fed speakers are ahead?
How are other markets trading?
Asian markets traded mostly higher Friday
(http://www.marketwatch.com/story/asian-markets-inch-forward-amid-us-china-friction-2018-12-06),
with the Nikkei 225 rising 0.8% and markets in South Korea and
Australia advancing on the day. The Shanghai Composite Index was
virtually flat, with gains of less than 0.1%.
European markets ended mostly higher Friday, with both the Stoxx
Europe 600 and the FTSE 100 in the green.
Crude oil is rising 2.2% Friday
(http://www.marketwatch.com/story/oil-prices-are-up-modestly-as-saudis-still-skeptical-of-opec-coalition-cuts-2018-12-07),
while gold is advancing 0.9% and the U.S. dollar edged 0.2% lower
(http://www.marketwatch.com/story/dollar-traders-take-a-breath-before-jobs-report-2018-12-07).
(END) Dow Jones Newswires
December 07, 2018 14:37 ET (19:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
FTSE 100
Index Chart
Von Mär 2024 bis Apr 2024
FTSE 100
Index Chart
Von Apr 2023 bis Apr 2024
