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Stocks sink as Wall Street eyes downside of solid jobs data

NEW YORK (AP) – United States (US) stocks fell broadly on Friday and pulled major indexes into the red for the week as Wall Street focussed on the downside of the still-strong US jobs market.

A report showed employers hired more workers last month than economists expected. While that’s a good sign for the economy amid worries about a possible recession, many investors saw it keeping the Federal Reserve on its path to hiking interest rates aggressively. Such moves would slow the economy in hopes of ultimately knocking down high inflation, and the Fed risks causing a recession if it moves too quickly or too far. In the meantime, higher interest rates put downward pressure on stocks and other investments.

The S&P 500 index fell 68.28 points, or 1.6 per cent, to 4,108.54. It’s a reversal from Thursday’s market movements, when a narrower report on the US jobs market came in weaker than expected. That bolstered speculation the Fed may consider a pause in raising rates later this year, and the hopes for a less-aggressive Fed sent stocks jumping.

The slide on Friday also dragged the benchmark S&P 500 into its eighth weekly loss in the last nine. The outlier in that stretch was last week, when stocks roared in part on speculation that the Fed would consider a pause in rate hikes in September.

The Dow Jones Industrial Average fell 348.58 points, or one per cent, to 32,899.70. The Nasdaq fell 304.16 points, or 2.5 per cent, to 12,012.73.

Bitcoin also fell, while a measure of worry in the stock market rose, even though some glass-half-full signals for inflationary pressures were buried within the jobs data.

Friday’s comprehensive report from the US government showed employers added 390,000 jobs last month, better than expectations for 322,500. That sent Treasury yields climbing, though they initially wobbled as investors moved from one knee-jerk reaction to another following the report’s release.

The yield on the two-year Treasury, which tends to move with expectations for Fed action, rose to 2.68 per cent from 2.62 per cent just before the report’s release. The 10-year yield, which tracks expectations for longer-term growth and inflation, rose to 2.95 per cent from 2.91 per cent after earlier climbing as high as 2.99 per cent.

A New York Stock Exchange trader works on the floor. PHOTO: AP