Stocks drop on rate-hike concerns, Gazprom news
U.S. stocks fell, with major indexes headed for a third weekly decline, after jobs data did little to alter views on the Federal Reserve’s next policy move.
A delay in the opening of a key gas pipeline to Europe also weighed on sentiment ahead of a three-day weekend for American markets.
The S&P 500 declined in the afternoon. It had climbed as much as 1.3% after employers added 315,000 jobs last month, slightly above what economists expected.
The two-year yield pushed below 3.5% as the jobs report showed wage growth slowed, potentially signaling some softening in labor demand.
The labor-market data add to a bevy of reports this week that validate the Fed’s assertion that the economy is robust enough to withstand more tightening.
Risk assets have been under pressure since Fed Chair Jerome Powell made clear the central bank will raise rates further and keep them elevated until price gains slow.
While Friday’s report prompted some traders to slightly tweak their views on the Fed’s next policy move, markets are still pricing in the likelihood of a three-quarters of a percentage point interest-rate hike this month.
“Market sentiment took a bearish turn in early afternoon trade, with equities fading all of their post-nonfarm payroll gains as participants responded to headlines indicating an extended shut down of the Nord Stream pipeline,” said Eric Theoret, global macro strategist at Manulife Investment Management.
Oil trimmed gains after news that the Group of Seven most industrialized countries agreed to introduce a price cap for global purchases of Russian oil.
In a massive blow to Europe, Russia’s Gazprom said its key gas pipeline to Europe can’t reopen as planned on Saturday as a new technical issue has been discovered.
Concern that rising rates will hurt growth has already weighed on markets, pushing global bonds into their first bear market in a generation.
The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds down more than 20% from a 2021 peak.
Meanwhile, zinc headed for its biggest weekly loss in over a decade on concern Chinese demand will be hamstrung by new virus restrictions. Gold and Bitcoin rose.