U.S. Stocks Turn In Lackluster Performance After Monthly Jobs Data

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Following a three-day winning streak, stocks showed a lack of direction over the course of the trading session on Friday. The major averages spent most of the session bouncing back and forth across the unchanged line.

The major averages finished the day in negative territory, with the Nasdaq underperforming its counterparts. While the Nasdaq fell 74.49 points or 0.5 percent to 14,579.54, the Dow edged down 8.69 points or less than a tenth of a percent to 34,746.25 and the S&P 500 dipped 8.42 points or 0.2 percent to 4,391.34.

Despite closing lower on the day, the major averages all moved to the upside for the week. The Dow jumped by 1.2 percent, the S&P 500 advanced by 0.8 percent and the Nasdaq inched up by 0.1 percent.

The choppy trading on Wall Street came after the Labor Department's closely watched monthly jobs report showed much weaker than expected job growth in the month of September.

The report said non-farm payroll employment rose by 194,000 jobs in September after climbing by an upwardly revised 366,000 jobs in August.

Economists had expected employment to jump by 500,000 jobs compared to the addition of 235,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate fell to 4.8 percent in September from 5.2 percent in August. The unemployment rate was expected to edge down to 5.1 percent.

With the bigger than expected decrease, the unemployment rate dropped to its lowest level since hitting 4.4 percent in March of 2020.

However, the drop in the employment rate was partly due to a decrease in the size of the labor force, reflecting lingering labor supply constraints.

The data led to some uncertainty about the outlook for monetary policy, although most economists agree the disappointing job growth will not dissuade the Federal Reserve from scaling back stimulus.

"The disappointing 194,000 gain in non-farm payrolls in September probably still counts as 'decent' enough for the Fed to begin tapering its asset purchases next month," said Andrew Hunter, Senior US Economist at Capital Economics.

He added, "But alongside signs that activity growth is slowing sharply, at the same time as worsening labor shortages are putting serious upward pressure on wage growth, it looks set to leave Fed officials in an uncomfortable position over the coming months."

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Energy stocks saw significant strength, however, with a sharp increase by the price of crude oil contributing to the strength in the sector. Crude for November delivery jumped $1.05 to $79.35 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index surged up by 2.7 percent and 2.4 percent, respectively, while the NYSE Arca Natural Gas Index advanced by 1.4 percent.

Transportation and banking stocks also saw some strength on the day, while telecom and commercial real estate stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index jumped by 1.3 percent, while China's Shanghai Composite Index advanced by 0.7 percent as trading resumed following a week-long holiday.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the German DAX Index fell by 0.3 percent and the French CAC 40 Index slid by 0.6 percent.

In the bond market, treasuries moved lower over the course of session after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.4 basis points to a four-month closing high of 1.605 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on consumer and producer prices, retail sales and import and exports as well as the minutes of the latest Fed meeting.

Earnings news may also attract attention, with financial giants JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), Wells Fargo (WFC) and Goldman Sachs (GS) among the companies due to report their quarterly results.

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