(Bloomberg) — U.S. equity futures fell after a better-than-expected U.S. jobs report increased bets of tighter monetary policy, erasing previous gains on bullish sentiment from Amazon.com Inc. earnings.
Contracts on the S&P 500 declined 0.1% while the Nasdaq 100 was little changed after gaining as much as 2.3%. Amazon trimmed its premarket gains, driven by a price hike for Prime memberships. Meanwhile, Europe’s Stoxx 600 fell as rate-hike bets reduced risk appetite. Treasuries yields spiked and the dollar rose.
U.S. employers added more jobs than forecast last month, despite a surge in Covid-19 infections and related business closures. U.S. payrolls came in higher than all economists expected at 467,000 — a three-month high — while average hourly earnings also rose a higher-than-expected 0.7% month over month.
The report is likely to increasing conviction in the Federal Reserve’s path forward.
“A strong jobs report, along with elevated inflationary economic data that we’ve seen recently, could boost expectations that we’ll see a 50-basis point rate increase at the March meeting,” said Brian Price, head of investment management for Commonwealth Financial Network. “I still believe that 25 basis points is the base case at this point but 50 is not off the table either.”
It’s been a volatile week in markets as investors were jolted by weak numbers at U.S. tech giants including Facebook-owner Meta Platforms Inc., which wiped more than $250 billion from its market value on Thursday. However, positive earnings from Amazon helped lift sentiment, with the online marketplace and tech company set to increase its market cap by more than $150 billion if its premarket gains hold in the regular session.
“Now we’re seeing a little bit of FOMO — all of a sudden, everyone’s seeing the numbers are good, ‘I’ve got to get my exposure back,’ and that’s what we’re seeing in the after-market moves right now,” Alon Rosin, Oppenheimer & Co.’s head of institutional equity derivatives, said by phone, late Thursday.
Dip buyers have hoped a stronger earnings season would keep equities attractive and counter some concerns about tighter monetary policy in the face of higher inflation. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimate, with profits coming in 8.8% above projected levels.
Still, signs of stubborn price pressures continue to appear as the latest data showed U.S. gasoline prices surged to the highest in more than seven years. Crude oil extended a fresh seven-year high in early trading, with banks including Goldman Sachs Group Inc. forecasting Brent will reach $100 a barrel.
“We are getting late in the cycle. The market is becoming more selective,” wrote Wells Fargo’s Chris Harvey. “The tide will no longer lift all boats and the market will become less and less forgiving in our view. Going forward, we feel investors will need to cut loses quickly and to focus on margins rather than the top or bottom line.”
Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased Friday, the mood in the stock market turned sour. Europe’s Stoxx 600 fell 1.3% as rate-hike bets reduced risk appetite. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.
Elsewhere, an Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong where markets reopened from a holiday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.1% as of 9:23 a.m. New York time
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 1.3%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $1.1446
- The British pound fell 0.5% to $1.3529
- The Japanese yen fell 0.2% to 115.23 per dollar
Bonds
- The yield on 10-year Treasuries advanced six basis points to 1.89%
- Germany’s 10-year yield advanced five basis points to 0.20%
- Britain’s 10-year yield advanced two basis points to 1.38%
Commodities
- West Texas Intermediate crude rose 2% to $92.06 a barrel
- Gold futures fell 0.1% to $1,801.60 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
