NEW YORK: The major US stock indexes slipped on Friday after a stronger-than-expected jobs report prompted investors to ramp up bets on an interest rate hike later this month.
A Labor Department report showed the US economy added 162,000 jobs in August, compared with estimates of 56,000, according to economists polled by Reuters. The unemployment rate stood at 4.1 percent last month, as expected.
The data could give the Federal Reserve more room to focus on inflation, especially as Chair Kevin Warsh has indicated that controlling price pressures is his top priority.
“This is obviously a very volatile report, but it does mean that at this point the Fed’s focus is going to be on inflation,” said Josh Stevens, chief investment officer at CresAlta Investment Management.
Traders added to expectations of an interest rate hike at the central bank’s September 15-16 meeting, with short-term interest-rate futures now implying a 60 percent chance of an increase, up from 55 percent before the report.
“The market just had a knee-jerk reaction to the jobs report. Investors are shooting first and asking questions later,” said Thomas Hayes, chairman at Great Hill Capital.
At 11:52 a.m. ET, the Dow Jones Industrial Average fell 305.54 points, or 0.57 percent, to 53,380.57, the S&P 500 lost 33.99 points, or 0.44 percent, to 7,713.72 and the Nasdaq Composite lost 114.87 points, or 0.43 percent, to 26,469.19.
The declines round out a rollercoaster week that saw traders rushing to recalibrate expectations as fresh data, earnings and Fed Governor Christopher Waller’s commentary shifted the policy outlook.
Attention now turns to next week’s inflation readings, with the Labor Department set to release CPI and PPI data that could prove pivotal to the Fed’s decision.
Consumer discretionary stocks fell 1.79 percent and led declines on the S&P 500. The PHLX semiconductor index rose 3 percent and was set to end a two-week losing streak.
Among individual stocks, Lululemon Athletica fell 17.99 percent after it slashed its full-year profit and revenue forecasts.
Adobe dropped 6.08 percent, as it said longtime CEO Shantanu Narayen will hand over the reins to company insider Anil Chakravarthy.
US credit reporting agencies lost ground after US Director of Federal Housing Bill Pulte said on Thursday he directed Fannie Mae and Freddie Mac, created by the US Congress to support the housing market, to approve all lenders to use thecredit-scoring system VantageScore.
Fair Isaac lost 15.99 percent and TransUnion was down 7.64 percent, while Equifax slid 6.58 percent.
As investors head into the Labor Day weekend, debate about the seasonal weakness of September also persists.
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