U.S. equity markets dipped as traders digested a weaker-than-expected July jobs report.
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The Dow Jones Industrial Average was 46 points lower, or 0.27% to 17373. The S&P 500 slid 6 points, or 0.29% to 2077, while the Nasdaq Composite shed 13 points, or 0.26% to 5043.
The materials and energy sectors declined the most of 10 S&P 500 sectors on Friday, falling 1.5% and 1.88% respectively. Meanwhile, biotech names sustained heavy losses for much of the day, and the Nasdaq biotech ETF closed 0.7% lower. Biotechs have long been the subject of controversy over what many see as sky-high valuations.
All eyes on Wall Street were focused on the July non-farm payrolls report from the Labor Department which showed the U.S. economy added fewer jobs than expected. In July, the economy tacked on 215,000 jobs, while Wall Street was looking for an increase of 223,000. As expected, the unemployment rate held steady at 5.3%, while the labor force participation rate also remained unchanged as expected at 62.6%.
Average hourly earnings increased 0.2% in July. Wages have been a sticking point for many economists as they have been slow to pick up the pace compared to the rest of the jobs economy.
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While the headline number was below expectations, it still represents another solid month of job creation. It’s widely expected the Federal Reserve will begin hiking short-term interest rates at its September meeting, and a positive jobs report would help bolster that view.
Phil Orlando, chief equity strategist and senior portfolio manager at Federated Investors said the jobs report looked good across the board.
“I couldn’t find anything weak about it,” he said. “This was a solid, though admittedly unspectacular report…the highlight of the report was the tick up in the hours worked. Futures selling off tells us the read in the market is the number did nothing to dissuade the Fed from lifting off in September, and we agree that that is the liftoff date, but we disagree with the market assessment. We think it’s a positive for the economy and corporate earnings growth, and eventually the market will rip up on higher rates, but today’s not that day.”
Following the report, the euro traded lower against the U.S. dollar, but reversed course late-morning, rising 0.4%. The yield on the benchmark 10-year U.S. Treasury fell 0.059 of a percentage point to 2.173%, close to a two-month low. Bond yields move in the opposite direction of prices.
“Without the Greek conundrum to muddy the waters EUR/USD is poised to react solely to today’s data, and as one of the few catalysts around today it will likely get the lion’s share of attention too,” IG market analyst Alastair McCaig added in a note.
The broader U.S. averages, meanwhile, ended the week in negative territory. The Dow logged its seventh-down day in a row, something that hasn’t happened in four years since an eight-day losing streak that ended on August 2, 2011.
In corporate news, Cablevision (CVC) reported its latest quarterly results ahead of the bell. The company reported a 1.6% increase in revenue thanks to higher fees for its cable customers. Investors kept a close eye on its performance in the wake of a two-day selloff among media giants, as worries about cord-cutting effects weighed after Disney’s (DIS) earnings results earlier this week.
“I think it’s something of an overreaction,” Orlando said of the activity in media stocks this week. “I think traders will step back, let the dust settle, then reevaluate the individual fundamentals relative to valuation. At that point, some of these stocks are on sale. That’s a great opportunity to find companies that, from that perspective, are still rock solid, just a lot cheaper.”
On the commodities front, crude oil prices were mostly lower on the last trading day of the week. U.S. crude fell 1.77% to $43.87 a barrel. On the week, U.S. crude lost 6.90%. Meanwhile, Brent, the international benchmark, dipped 1.35% to $48.83 a barrel, also shedding 6.90% for the week. The energy sector declined about 1.5% for the day and 3% for the week.
Metals reversed course in late-morning action after seeing slight losses earlier. Gold traded up 0.16% to $1,091 a troy ounce, while copper sagged 0.66% to $2.33 a pound, hitting a new six-year low.
Across the world, the Shanghai Composite index jumped 2.26%, while Hong Kong’s Hang Seng rose 0.73%, and Japan’s Nikkei ticked 0.29% higher.
A mixed picture on the industrial production front in Europe with output falling in Germany, but rising in Spain didn’t do much to help markets there head higher. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, fell 0.81%. The German Dax dipped 0.81%, the French CAC 40 fell 0.72%, while the UK’s FTSE 100 ticked 0.42% lower.