Wall Street Slumps Reacting To Latest Jobs Report
U.S. markets are lower this afternoon after the U.S. jobs report released today showed that job creation across the nation slowed last month.
By Paolo Palazzi-Xirinachs
Friday, February 5, 2016 - 00:00
Oil prices have also continued to decline this week, with investors selling energy and consumer discretionary stocks as a worrisome quibble about the risk of the U.S. economy slipping into recession – while far-fetched – seems to be whispered about in certain trading circles. In early afternoon trading, the Dow Jones industrial was down 1.2%, and the S&P 500-stock index was down 1.6%, and the Nasdaq index dropped 2.8%.
The jobs report showed that employers added 151K jobs last month, a sharp deceleration from recent months as companies shed education, transportation and seasonal temporary workers. That was below economists’ forecasts of a creation of 185K jobs. On the positive side, the unemployment rate fell to 4.9% from 5 percent, the lowest level since February 2008, and nearing “full employment” - which means that unemployment has fallen to the lowest possible level without provoking inflation. The mystery is what that level might be. In the U.S., according to prevailing estimates, it’s a jobless rate of about 5% — just above the January rate reported. But the consensus has always been shaky and there’s a lot resting on a debate about how much further, if at all, unemployment can fall without causing inflation to take off.
The report also showed that average wages rose 2.5% over the last year to $25.39 an hour, evidence that the years of job growth are helping to generate larger pay raises. “It’s a rather difficult report to interpret. It confirms there has been some deceleration in the U.S. economy. We’re not falling off the cliff, but it clearly shows the U.S. economy is not immune to the global slowdown,” said Russ Koesterich, a global market strategist with BlackRock to the New York Times.
The jobs report, while not as good as economists were looking for, still showed the economy growing, albeit slowly. The report caused the dollar to strengthen against other currencies, reversing some of the last two days of declines. Investors had been betting that a slowing economy might cause the Federal Reserve to stall its plans to raise. The dollar rose to 117.25 yen from 116.71 yen, while the euro fell to $1.1112 from $1.1214, which was its highest level in more than three months.
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