Stocks open lower on concerns the Fed will keep rates high

American flags fly outside the New York Stock Exchange, Friday, Sept. 23, 2022, in New York. (AP Photo/Mary Altaffer, File)

American flags fly outside the New York Stock Exchange, Friday, Sept. 23, 2022, in New York. (AP Photo/Mary Altaffer, File)

NEW YORK (AP) — Good news on the economy is still bad news for Wall Street. Stocks are falling in the early going Friday after a report on the U.S jobs market came in stronger than expected, raising concerns that the Federal Reserve will have no choice but continue its aggressive efforts to slow the economy with high interest rates, the bitter medicine it is using to fight inflation. The worry is that the economy will slow down so much it will enter a recession, putting people out of work and knocking down company profits. The S&P 500 fell 1.6% and the Dow fell 1.2%.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street shifted between small gains as losses early Friday with all eyes on the release of U.S. employment data that could affect decisions by the Federal Reserve as it attempts to curb inflation through interest rate hikes.

Futures for the S&P 500 fell less than 0.1% and futures for the Dow Jones Industrial Average rose 0.1%.

Major U.S. indices are poised to finish the week with gains, despite a sell-off over the past two days as other jobs data was released.

U.S. government data Thursday showed the number of applications for unemployment benefits hit a four-month high last week, suggesting the job market might be cooling. On Tuesday, the government reported that the number of available jobs in the U.S. plummeted 10% in August compared with July as businesses grow less desperate for workers.

Sandwiched between those two reports was a private sector report that said U.S. employers hired slightly more workers than forecast in September. That gives ammunition to Fed officials who say more rate hikes are needed to cool the economy and rein in inflation that is at a four-decade high.

U.S. government data due out Friday is expected to show fewer people were hired compared with previous months, but most economists do not believe it will be enough to dissuade the Fed from its aggressive stance after five rate hikes this year.

“What the market seems to be crying out for is a Fed pivot,” said Robert Carnell of ING in a report. “For its part, the Fed is sticking to its ‘higher for longer’ mantra.”

That pivot seems unlikely after Federal Reserve Governor Lisa Cook said Thursday that more interest rate increases will be necessary to wrestle inflation under control, echoing several tough speeches by other central bank officials this week.

Forecasters expect the government to report the economy added 250,000 jobs last month, well below the past year's monthly average of 487,000 but still a strong number despite inflation and two straight quarters of U.S. economic contraction.

In Europe at midday, the FTSE 100 in London gained 0.1%,the DAX in Frankfurt was flat and the CAC 40 in Paris advanced 0.2%.

In Asia, the Nikkei 225 in Tokyo sank 0.7% to 27,116.11 and Hong Kong’s Hang Seng tumbled 1.5% to 17,740.05.

The Kospi in Seoul shed 0.2% to 2,232.84 while Sydney’s S&P ASX 200 lost 0.8% to 6,762.80.

India’s Sensex lost less than 0.1% to 58,213.21. New Zealand and Southeast Asian markets declined.

In energy markets, benchmark U.S. crude gained $1.16 to $89.61 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 69 cents on Thursday to $88.45. Brent crude, the price basis for trading international oils, advanced $1.12to $95.54 per barrel in London. It rose $1.05 the previous session to $94.42.

The dollar declined to 144.89 yen from Thursday's 145.07 yen. The euro inched up to 97.96 cents from 97.94 cents.

On Thursday, the S&P 500 lost 0.2%. The index is up 4.4% for the week following its best two-day rally in 2 1/2 years. The Dow slid 1.1% and the Nasdaq composite gave up 0.7%, but both are also up more than 4% headed into the final trading day of the week.

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McDonald reported from Beijing; Ott from Washington.