Mixed Jobs Data Leads To Lower Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly lower during trading on Friday following the release of the closely watched monthly employment report. The losses on the day came after the major averages ended the previous session on opposite sides of the unchanged line.

The major averages climbed off their worst levels late in the session but still closed firmly in the red. The Dow dropped 272.38 points or 1.7 percent to 16,102.38, the Nasdaq slid 49.58 points or 1.1 percent to 4,683.92 and the S&P 500 fell 29.91 points or 1.5 percent to 1,921.22.

For the week, the major averages all posted substantial losses. The Nasdaq tumbled by 3 percent, while the Dow and the S&P 500 plummeted by 3.2 percent and 3.4 percent, respectively.

The weakness on Wall Street came as the Labor Department's monthly jobs report offered mixed data, adding to recent uncertainty about the outlook for interest rates.

The report showed much weaker than expected job growth in August but also a drop in the unemployment rate and an increase in wages.

The Labor Department said non-farm payroll employment climbed by 173,000 jobs in August, well below the increase of 220,000 jobs anticipated by economists.

However, the report also showed upward revisions to the job growth seen in both June and July, with the revised data showing increases of 245,000 jobs in each month.

With the upward revisions, employment gains in June and July combined were 44,000 more than previously reported.

The report also said the unemployment rate edged down to 5.1 percent in August from 5.3 percent in July, hitting its lowest level since April of 2008.

Additionally, the Labor Department said average hourly employee earnings climbed 0.3 percent to $25.09 in August, reflecting a 2.2 percent year-over-year increase.

"August's employment report is fairly mixed and can be used to make a case for or against a rate hike at the upcoming FOMC meeting," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "As far as we're concerned, the September meeting is a 50-50 toss-up."

The mixed data is likely to increase the focus on the other economic reports due to be released in the weeks leading up to the Federal Reserve's next monetary policy announcement on September 17th.

Sector News

Most of the major sectors moved to the downside on the day, reflecting broad based selling pressure on Wall Street.

Steel stocks saw substantial weakness, dragging the NYSE Arca Steel Index down by 3.5 percent. Schnitzer Steel (SCHN), AK Steel (AKS), and U.S. Steel (X) turned in some of the sector's worst performances.

Considerable weakness also emerged among computer hardware stocks, as reflected by the 2.2 percent loss posted by the NYSE Arca Computer Hardware Index. Hewlett-Packard (HPQ) helped to lead the sector lower, falling by 3.4 percent.

Energy stocks also came under pressure on the day, moving lower along with the price of crude oil. Crude for October delivery slid $0.70 to $46.05 a barrel.

Housing, commercial real estate, chemical, and semiconductor stocks also saw notable weakness, while some airline stocks bucked the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 2.2 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets also came under pressure following Thursday's rally. While the U.K.'s FTSE 100 Index slumped 2.4 percent, the German DAX Index and the French CAC 40 Index plunged 2.7 percent and 2.8 percent, respectively.

In the bond market, treasuries moved to the upside on the heels of the mixed jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.128 percent.

Looking Ahead

Following the Labor Day holiday on Monday, the economic calendar for next week is relatively light, although traders are likely to keep a close eye on reports on weekly jobless claims, producer prices, and consumer sentiment.