(Bloomberg) — Stocks struggled for direction as a sharp slowdown in U.S. hiring put the focus on whether the Federal Reserve should delay a reduction in the stimulus that has helped push the market to a record.
Traders turned to the perceived safety of technology giants, while most major groups in the S&P 500 fell. The Treasury curve steepened amid bets the Fed will postpone normalizing monetary policy. Ten-year yields climbed, with the gap between 5- and 30-year rates increasing. Investors also weighed a Bloomberg News report saying that Senate Democrats are discussing a wider range of tax proposals than President Joe Biden envisioned, including levies on stock buybacks, carbon emissions and executive compensation.
Read: Biden Defends ‘Durable’ Economic Recovery, Plays Down Jobs Miss
U.S. hiring downshifted abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Fed to begin scaling back monetary support by year end. Nonfarm payrolls rose 235,000 last month — trailing all forecasts — after an upwardly revised 1.05 million gain in July. Employment in leisure and hospitality was flat amid the spreading delta variant and persistent hiring challenges.
Comments:
“This is a major miss and screams delta disruption,” said Seema Shah, chief strategist at Principal Global Investors. “Today’s very weak number will likely sway the Fed to a November taper, if not later.”
“The jobs report means slower economic growth, but also means the Fed is not going to tighten any time soon, and that should significantly limit any negative impact on markets,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.
“I don’t think it’s going to change much for the Fed taper timeline,” said Zhiwei Ren, portfolio manager at Penn Mutual Asset Management. “The consensus is November, December — I think nothing changes. We have a number that was weak, but if we look below the surface, it’s quite strong actually because of wage growth.”
In the run-up to the jobs report, equity funds attracted $19.2 billion of inflows, trailed by the $12.7 billion allocated to bonds, according to Bank of America Corp. The firm cited EPFR Global data for the week through Wednesday. Outflows from cash funds were the biggest in seven weeks, with $23 billion exiting.
Read: Fund Managers Feel Heat in SEC Crackdown on Overblown ESG Labels
Some corporate highlights:
Alibaba Group Holding Ltd. and Pinduoduo Inc. paced losses in shares of Chinese companies listed in the U.S., following a slump in Asia as investors remained wary over new clampdowns.
Beijing’s municipal government has proposed an investment in Didi Global Inc. that would give state-run firms control of the ride-hailing company, according to people familiar with the matter
Forte Biosciences Inc. plummeted after its only product in development failed to have an effect on a common skin disease.
Broadcom Inc., one of the world’s largest chipmakers, climbed after giving a bullish sales forecast, helped by demand for components used in corporate computer networks and smartphones.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.1% as of 12:04 p.m. New York time
The Nasdaq 100 rose 0.2%
The Dow Jones Industrial Average fell 0.3%
The Stoxx Europe 600 fell 0.6%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro was little changed at $1.1883
The British pound rose 0.2% to $1.3861
The Japanese yen rose 0.3% to 109.65 per dollar
Bonds
The yield on 10-year Treasuries rose four basis points to 1.32%
Germany’s 10-year yield advanced two basis points to -0.36%
Britain’s 10-year yield advanced four basis points to 0.72%
Commodities
West Texas Intermediate crude fell 0.8% to $69.42 a barrel
Gold futures rose 1.1% to $1,831.20 an ounce
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