Stock futures fell on Friday as investors digested warmer-than-expected jobs data, troubling investors looking for signals that the Federal Reserve may start to ease interest rate hikes.
Futures relative to the Dow Jones industrial average futures were down 383 points, or 1.1%. S&P 500 and Nasdaq-100 futures lost 1.4% and 1.9%.
Nonfarm payrolls rose 263,000 in November. A huge gain That was more than the 200,000 increase expected by economists polled by the Dow Jones. The unemployment rate held steady at 3.7%.
Treasury yields rose as stocks slipped as investors digested the data, which has been closely watched by workers, a relatively stubborn part of the economy that has not clearly shown the effects of previous interest rate hikes. Investors expected the lower number to signal a cooling labor market, while the stronger one signaled the U.S. could avoid a recession.
“The supply of labor is tight and the demand for labor is high,” said Michael Aron, chief investment strategist at State Street Global Advisors. “That means wage inflation will be sticky, and that’s a problem for stocks going forward because it will keep the Fed more dovish.”
Friday is the final monthly employment report, ahead of the Federal Reserve’s two-day meeting on December 13 and 14, in which the central bank is expected to raise its fed funds target rate by half a percentage point. The 50 basis point increase would represent a drop from the previous 75 basis point rate hike set by the central bank.
Federal Reserve Chairman Jerome Powell appeared Confirm the speed rise on the horizon In a Wednesday speech, he indicated that a pullback could begin as early as this month. Following his comments, the Dow rose more than 700 points and stocks rallied.
On Thursday, the Dow closed down nearly 195 points as traders sought to reduce exposure ahead of the jobs data. The S&P 500 fell 0.09% on Thursday, while the tech-heavy Nasdaq composite rose 0.13%.
Thursday’s moves followed a mix of economic data Major Personal Consumption Expenditure Report This was slightly better than expected on a monthly basis and a larger than expected decline in the ISM manufacturing index. The so-called PCE deflator is one of the Federal Reserve’s preferred inflation measures.