US stocks fell and Treasury yields jumped after the monthly jobs report, capping a volatile week to start the new year.
The S&P 500 is down 0.5% after closing 0.1% lower in the volatile Thursday session. The Nasdaq Composite Index fell 1.1% and the Dow Jones Industrial Average lost 0.2%.
The first week of the new year was marked by significant volatility across the stock and bond markets as investors fled some of the most popular trades of the past year and analyzed signals from the Federal Reserve on the path to raising interest rates. With bond prices plummeting and Treasury yields jumping, investors have dumped technology and growth stocks, particularly some of the most speculative bets in those sectors.
The tech-heavy Nasdaq Composite has lost about 4% this week and is on track to post its worst week since at least February 2021. He underperformed his peers on Friday. As of Thursday, the S&P 500’s growth index was also heading for its worst weekly performance since at least February 2021.
The yield on the benchmark 10-year Treasuries swung sharply in early trading on Friday and recently hovered at 1.677%, after four consecutive days of gains. Yields increase as bond prices fall. The yield on the 10-year Treasury jumped to 1.769% after the latest monthly jobs report, hitting the highest intraday level since January 2020, according to Tradeweb.
The jobs report showed that the US added 199,000 jobs in December, less than the expected 422,000. However, he concluded 2021 with the US adding a record number of jobs last year. The unemployment rate fell to 3.9%.
Friday’s jobs report was the latest among many confusing signals about economic recovery that investors are assessing. Analysts have struggled to estimate job gains during the pandemic and the government is getting less data from employers. Investors are also dealing with a factor they have mostly overlooked over the past decade: inflation.
Stocks came under pressure this week after the Federal Reserve’s meeting minutes confirmed its intention to withdraw stimulus and suggested it might do so sooner and faster than previously planned, due to rising inflation. The S&P 500 is down 1.8% this week, on track for its worst weekly performance since at least mid-December.
Government bonds were sold off with market prices at the prospect of early interest rate increases and the Federal Reserve reducing its bond portfolio in the near future.
“The markets here are intimidating a few minutes and maybe a little bit of what you see in the job market,” said Mona Mahajan, chief investment analyst at Edward Jones.
Meme GameStop stock jumped 18% after The Wall Street Journal reported that the company was planning to enter the cryptocurrency and non-cryptocurrency markets. AMC EntertainmentAnd
Another company popular with retailers, it advanced 4%.
“Everything happening in the markets this week has been about expectations about how quickly the Fed will tighten policy,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “This is a transition year as we move from standard policy support to actual tightening. There will be huge volatility as we figure out how to work in that model.”
Fed officials said the health of the labor market is a critical factor in their monetary policy decisions. Investors will examine the report to see if it is in line with the Fed’s plans outlined in the minutes and whether wages are continuing to increase, which could mean more sustainable inflation.
“If the data shows that the labor market remains very hot, it reinforces the hawkishness that the Fed needs to continue and tighten policy,” said Sebastian Mackay, a multi-asset fund manager at Invesco.
Oil prices rose. Global benchmark Brent crude rose 0.8% to $82.63 a barrel in recent trading, its highest level in more than eight weeks. Oil supplies will likely be lower due to cold weather in North Dakota and Alberta, Canada, and if protests in crude producer Kazakhstan affect production, according to analysts at ING.
Offshore, the Stoxx Europe 600 Index is down 0.3%.
European government bond yields rose, with the German 10-year bond yield rising to -0.1%. If it crosses zero, it will be in positive territory for the first time since 2019.
In Asia, the major stock indices were mixed. The Shanghai Composite Index is down 0.2%, while Hong Kong’s Hang Seng Index is up 1.8%, led by gains in technology stocks. South Korea’s Kospi Index is up 1.2%.
Sam Goldfarb contributed to this article.
Write to Anna Hirtenstein at email@example.com
Corrections and amplifications
GameStop collected a supermarket. An earlier version of this article incorrectly referred to GameStop as GameStock. (Corrected January 7th.)
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