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U.S. Stocks Seeing Volatility As Traders Eye Bond Market Reaction To Jobs Data

wallstreet2 05mar21 lt

After moving sharply lower over the past few sessions, stocks have seen considerable volatility in morning trading on Friday. The major averages have shown wild swings on the day, facing difficulty sustaining any significant moves.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 61.04 points or 0.5 percent at 12,662.43, the Dow is up 179.58 points or 0.6 percent at 31,103.72 and the S&P 500 is up 12.05 points or 0.3 percent at 3,780.52.

The volatility on Wall Street comes after the Labor Department released a report showing much stronger than expected job growth in the month of February.

The Labor Department said non-farm payroll employment jumped by 379,000 jobs in February after climbing by an upwardly revised 166,000 jobs in January.

Economists had expected employment to increase by 182,000 jobs compared to the uptick of 49,000 jobs originally reported for the previous month.

The stronger than expected job growth was primarily due to a rebound in employment in the leisure and hospitality industry, which added 355,000 jobs.

The report also said the unemployment rate unexpectedly edged down to 6.2 percent in February from 6.3 percent in January. Economists had expected the unemployment rate to remain unchanged.

The modest decrease pulled the unemployment rate down to its lowest level since hitting 4.4 percent last March, when coronavirus-related lockdowns began to take effect.

The strong jobs data is an upbeat sign for the economy, but traders are also paying close attention to the reaction in the bond markets.

Yields initially jumped in reaction to the jobs report, with the yield on the benchmark ten-year note reaching a one-year high above 1.6 percent.

The ten-year yield has given back some ground since then but remains at a relatively elevated level, adding to recent concerns about inflation and higher interest rates.

Most of the major sectors are showing only modest moves on the day, although energy stocks are seeing substantial strength amid another sharp increase by the price of crude oil.

After spiking $2.55 to $63.83 a barrel on Thursday, crude for April delivery is surging up $2.12 to $65.96 a barrel after OPEC and its allies agreed to extend production cuts.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 4.7 percent and the NYSE Arca Oil Index is up by 3.4 percent.

Steel stocks are also seeing considerable strength on the day, resulting in a 1.9 percent jump by the NYSE Arca Steel Index.

On the other hand, airline stocks have moved sharply lower over the course of the morning, dragging the NYSE Arca Airline Index down by 4.3 percent.

Significant weakness has also emerged among biotechnology stocks, as reflected by the 1.5 percent drop by the NYSE Arca Biotechnology Index.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.8 percent, the French CAC 40 Index and the German DAX Index are both down by 0.1 percent.

In the bond market, treasuries have climbed well off their worst levels but continue to see modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.3 basis points at 1.563 percent.

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