US stocks fell Friday, as investors struggled to process a strong jobs report, and how it might affect the Fed’s monetary policy.
The DJIA dropped 1.1%, or 348.58 points to 32,899.70. S&P 500 dropped 1.6% to 4,108.54, and the Nasdaq Composite dropped almost 2.5% to 12,012.73. All three finished down on the week, with the DOW and Nasdaq losing about 1% for the week, and the S&P 500 losing about 1.2%.
The latest jobs report showed strong hiring in May, with 390,000 non-farm payrolls added, beating expectations of 328,000. Average hourly earnings were up .3% in May, which was slightly less than consensus estimates of .4%, but in line with April’s numbers.
Mark Hackett, Nationwide’s chief of investment research, said, “Good news is bad news. … It reminds us that the Fed is still the swing factor, at least in investor emotion.”
Tom Essaye of the Sevens Report said, “Numbers this strong would likely reverse any hopes the Fed would consider a pause in rate hikes after the June/July increases, because it would signal the labor market remains very tight.”
Adding to the worries, Cleveland Fed President Loretta Mester said later Friday she supports aggressive rate hikes, having not seen enough evidence inflation has peaked. She said, “I don’t want to declare victory on inflation before I see really compelling evidence that our actions are beginning to do the work in bringing down demand in better balance with aggregate supply.”
Technology shares fell Friday as well. Micron Technology dropped 7.2%, as Nvidia dropped about 4.5%. Google-parent Alphabet and Meta Platforms dropped about 2.6% and 4.1%, respectively.
Apple slid about 3.9% after Morgan Stanley said slowing App Store growth was a risk.
Tesla shares fell 9.2% after Reuters reported Elon Musk halted hiring and planned to shed 10% of Tesla’s staff amid a “super bad” feeling about the economy.
Musk’s comments came after other pessimistic comments from JPMorgan Chase CEO Jamie Dimon, who on Wednesday said an economic “hurricane” lies ahead due to the war in Ukraine and the Fed’s tightening of monetary policy.
Fridays losses come despite a strong session Thursday and a winning prior week.
Nationwide’s Hackett said, “We have transitioned pretty demonstrably from a ‘buy the dip’ world last year to a ‘sell the rally.’ Last week was a rally, this week is a bit of a pullback. Yesterday was a rally, today’s a pullback. It’s very hard to have consecutive weeks or consecutive days of strength because there’s so much worry that people use any piece of good news as a chance to sell,”
