Disappointing Jobs Data Weighing On Wall Street - U.S. Commentary

(RTTNews) - After seeing initial weakness, stocks have fluctuated over the course of morning trading on Friday but maintained a largely negative bias. The losses on the day come on the heels of the release of disappointing jobs data.

In recent trading, the major averages have pulled back more firmly into negative territory. The Dow is down 64.30 points or 0.4 percent at 17,596.41, the Nasdaq is down 31.18 points or 0.7 percent at 4,685.91 and the S&P 500 is down 9.30 points or 0.5 percent at 2,041.33.

The weakness currently visible on Wall Street comes following the release of a report from the Labor Department showing much weaker than expected job growth in April.

The report said non-farm payroll employment rose by 160,000 jobs in April compared to economist estimates for a jump of about 200,000 jobs.

Revised data also showed that employment in February and March increased by 233,000 jobs and 208,000 jobs, respectively, reflecting a net downward revision of 19,000 jobs.

The Labor Department also said the unemployment rate held at 5.0 percent in April, unchanged from the previous month. The rate had been expected to edge down to 4.9 percent.

Meanwhile, the report also showed that average hourly employee earnings rose by $0.08 or 0.3 percent to $25.53 in April.

The annual rate of growth in average hourly earnings subsequently accelerated to 2.5 percent in April from 2.3 percent in March.

The weaker than expected job growth has added to concerns about the strength of the economy, although the data has also led to speculation the Federal Reserve will further delay raising interest rates.

Chris Low, chief economist at FTN Financial, said, "Given Yellen's cautious nature, wait and see is likely what the FOMC will do in June if the May report is weak, but there's a whole month to get through before we find out."

"For the time being, consider the odds of a June hike reduced, but only marginally. Not that they were ever all that high to begin with," he added.

Among the major sectors, airline stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.5 percent. With the loss, the index has fallen to a two-month low.

Copa Airlines parent Copa Holdings (CPA) is posting a particularly steep loss despite reporting better than expected first quarter results.

Telecom, pharmaceutical, and utilities have also come under significant selling pressure, while gold stocks have moved sharply higher along with the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index slumped by 1.7 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index has risen by 0.5 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.'s FTSE 100 Index is slightly lower.

In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.754 percent.