Stocks fall again, weighed down by jobs report and Apple results
Stocks fell Friday, closing out a rare losing week for Wall Street after mixed reports on the U.S. job market and two of the market’s most influential stocks.
The Standard & Poor’s 500 index sank 23.86 points, or 0.5%, to 4,478.03. It was the fourth straight drop for Wall Street’s main measure of health after it set a 16-month high at the start of the week.
The Dow Jones industrial average also drifted between gains and losses through the day before ending with a loss. It closed down 150.27 points, or 0.4%, at 35,065.62, and the Nasdaq composite fell 50.48 points, or 0.4%, to 13,909.24.
Treasury yields tumbled in the bond market after a highly anticipated U.S. jobs report said hiring was a touch weaker last month than economists expected, though wages for workers rose more than forecast.
U.S. employers added 187,000 jobs last month, fewer than expected, as higher interest rates continued to weigh on the economy.
The job market is in a precarious place, where investors want a reading that’s neither too hot nor too cold. On one hand, investors want it to remain strong enough to keep the economy out of a long-predicted recession. On the other, they don’t want wage growth in particular to be so strong that the Federal Reserve sees it putting upward pressure on inflation.
Friday’s reading offered no slam dunks for either side, but analysts said it may suggest a job market that’s moderating.
“Over the last year the labor market has shifted from one where everyone wins to one where there are plenty of areas of weakness,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Wage growth was stronger than expected, but coupled with a shorter workweek you get lower incomes. Fed officials will see what they want to see, but it’s pretty clear that manufacturing is struggling and services is slowing.”
If the job market keeps moderating, it could let inflation continue to cool from the peak it reached last summer. That in turn would bolster Wall Street’s hopes that the Federal Reserve won’t raise interest rates any further.
High rates work to grind down inflation by slowing the overall economy and hurting prices for investments. The Fed has already raised its federal funds rate to its highest level in more than two decades, up from virtually zero early last year.
Critics, though, say it’s far from assured that inflation will easily drop back down to the Fed’s target and that the economy will avoid a painful recession. That’s why they say the 19.5% surge for the S&P 500 through this year’s first seven months was too much, too fast. This week was just the third losing week for the S&P 500 in the last 12.
Despite more than a year of widespread warnings that a recession was near, America’s economy is, if anything, accelerating.
Big Tech stocks in particular led Wall Street’s charge this year, with expectations for strong continued growth leading to tremendous gains in their stock prices. Two of them offered a mixed picture of their results after trading ended Thursday.
Amazon jumped 8.3% on Friday after the e-commerce giant reported a much bigger profit for the spring quarter than expected. The company said growth for its important cloud-computing business stabilized during the quarter, and its revenue topped analysts’ forecasts.
Apple, though, slumped 4.8% even though the tech giant reported stronger-than-expected profit. Its revenue just barely topped analysts’ estimates, and its forecast for revenue in the current quarter didn’t blow past expectations. The stock had climbed 47% for the year through Thursday, with its total value topping $3 trillion, meaning high expectations were built into its price.
Because it’s the biggest stock on Wall Street by market value, Apple’s movements pack extra punch on the S&P 500 and other indexes. It was by far the single biggest weight on the S&P 500 on Friday.
Like Amazon and Apple, most companies in the S&P 500 have been reporting stronger-than-expected quarterly profits. That’s usually the case, but expectations were particularly low coming into this reporting season. Analysts are still calling for the worst drop in profits for S&P 500 companies in nearly three years.
Booking Holdings jumped 7.9%, one of the biggest gains in the S&P 500, after the operator of travel websites blew past analysts’ forecasts for the spring. It said customers are looking to book leisure travel, and the strong demand is continuing into the current quarter. Its brands include Booking.com and Priceline.
In the bond market, the yield on the 10-year Treasury dropped to 4.04% from 4.18% late Thursday. It helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for the Fed, fell to 4.77% from 4.89%.
In stock markets abroad, indexes were mostly higher across Europe and Asia.
