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Stocks Move Back To The Downside In Morning Trading - U.S. Commentary


Following the substantial recovery seen over the course of the previous session, stocks have moved back to the downside in morning trading on Friday. The major averages briefly climbed into positive territory but have pulled back firmly into the red since then.

In recent trading, the major averages have fallen to new lows for the session. The Dow is down 247.28 points or 1 percent at 24,700.39, the Nasdaq is down 88.96 points or 1.2 percent at 7,099.30 and the S&P 500 is down 26.02 points or 1 percent at 2,669.93.

The weakness on Wall Street comes after the Labor Department's closely watched monthly jobs report showed U.S. employment increased by much less than expected in the month of November.

The Labor Department said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October.

Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.

Average hourly employee earnings rose by $0.06 to $27.35 in November, reflecting a 3.1 percent increase compared to the same month a year ago. The annual rate of growth was unchanged from October.

"The slightly more modest 155,000 gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"But this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace," he added. "There is nothing here to suggest the economy is suffering a more sudden downturn."

Lingering skepticism about a U.S.-China trade agreement is also weighing on the markets even though President Donald Trump tweeted, "China talks are going very well!"

Reflecting weakness in the broader technology sector, computer hardware and semiconductor stocks are turning in some of the market's worst performances in morning trading.

Currently, the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index are down by 2.1 percent and 1.6 percent, respectively.

Healthcare and biotechnology stocks are also seeing notable weakness, while energy stocks are moving sharply higher along with the price of crude oil.

Crude for January delivery is spiking $2.13 to $53.62 a barrel after Iran's Energy Minister said OPEC producers have agreed to cut output by 800,000 barrels a day.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.8 percent, while Australia's S&P/ASX 200 Index rose by 0.4 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has climbed by 0.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are jumping by 1.3 percent and 1.8 percent, respectively.

In the bond market, treasuries are seeing modest weakness after moving sharply higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.9 basis points at 2.895 percent.

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