Visitors to the financial district walk past the New York Stock Exchange, Friday, Sept. 23, 2022, in New York. (AP Photo/Mary Altaffer, File) Logos the New York Stock Exchange adorn trading posts, on the floor, Wednesday, March 16, 2022. (AP Photo/Richard Drew, File) A security guard is seen next to a road block near the New York Stock exchange, Friday, Jan. 14, 2022, in the Financial District. (AP Photo/Mary Altaffer, File)
NEW YORK (AP) — Wall Street’s rally hit a wall after a shocking jobs report showed the U.S. economy created a third of a million more jobs last month than expected, fueling worries about inflation and higher interest rates. The S&P 500 fell 1% in early trading Friday and is on pace for its first drop after three days of big gains. The Dow fell 0.3%, and the tech-heavy Nasdaq composite was 1.7% lower. Treasury yields rose sharply. The market was already headed for a lower open after several of Wall Street’s most influential companies late Thursday reported weaker results than analysts had expected.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Weaker-than-expected financial performances from some of the country's biggest tech companies dragged U.S. markets lower early Friday and a hot monthly employment report briefly sent futures even lower.
Futures for the Dow Jones industrials fell 0.5% while the S&P 500 slipped 1%. Futures for the tech-heavy Nasdaq tumbled 1.8% in off-hour trading after three technology bellweathers — Apple, Amazon and Alphabet — posted lackluster quarterly results after Thursday's close.
America’s employers added a robust 517,000 jobs in January, a surprisingly strong gain in the face of the Federal Reserve’s aggressive drive to slow growth and tame inflation with higher interest rates.
The unemployment rate dipped to 3.4%, a new half-century low.
Many technologies companies have announced high-profile layoffs recently, but the government's weekly unemployment benefits report Thursday hinted early that job cuts are not that widespread. Fewer workers applied for unemployment benefits last week than expected, and the number dropped to its lowest level since April. There are still nearly two available jobs for every unemployed American.
Stocks have gained since the year began on hopes that the U.S. Federal Reserve may soon pause interest rate hikes. Such increases help stamp out inflation but also make borrowing costlier for businesses and households, which slow the economy.
Technology companies had been riding high Thursday, coattailing off Facebook parent Meta, which rose 23% after reporting late Wednesday that its revenue beat Wall Street’s muted expectations and announcing a $40 billion stock buyback.
But after the bell, Apple posted its first quarterly revenue drop in nearly four years, Amazon reported worse-than-expected fourth-quarter profit, and Google parent Alphabet reported a 34% decline in profit. The three companies' shares were down between 2.6% and 3.6% a couple hours before the bell Friday.
The tepid tech results and overnight losses dragged most markets in Asia and Europe lower.
At midday, Germany’s DAX tumbled 0.6%, France’s CAC 40 lost 0.2% and Britain's FTSE 100 added 0.2%.
Japan's benchmark Nikkei 225 added 0.4% to finish at 27,509.46. Australia's S&P/ASX 200 gained 0.6% to 7,558.10. South Korea's Kospi added 0.5% to 2,480.40. Hong Kong's Hang Seng slipped 1.4% to 21,660.47, while the Shanghai Composite dropped 0.7% to 3,263.41.
The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.40% from 3.42% late Wednesday. The two-year yield, which moves more on expectations for the Fed, held at 4.10%.
In energy trading, benchmark U.S. crude fell 13 cents to $75.75 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, dropped 21 cents to $81.96 a barrel in London.
In currency trading, the U.S. dollar slipped to 128.43 Japanese yen from 129.67 yen. The euro cost $1.0936, up from $1.0914.
Kageyama reported from Tokyo; Ott reported from Silver Spring, Md.
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