Negative Reaction To Jobs Data Weighing On Wall Street - U.S. Commentary

(RTTNews) - Extending the downward move seen in the previous session, stocks have moved notably lower during trading on Friday. With the continued drop on the day, the Dow has fallen to its lowest intraday levels in six months.

In recent trading, the major averages climbed off their worst levels, but they remain firmly negative. The Dow is down 100.79 points or 0.6 percent at 17,318.96, the Nasdaq is down 34.12 points or 0.7 percent at 5,022.32 and the S&P 500 is down 10.94 points or 0.5 percent at 2,072.62.

A negative reaction to the Labor Department's highly anticipated monthly jobs report is contributing to the weakness on Wall Street.

The report showed somewhat weaker than expected job growth in July, but the data was widely seen as strong enough to support an increase in interest rates in September.

The Labor Department said non-farm payroll employment rose by 215,000 jobs in July following an upwardly revised increase of 231,000 jobs in June.

Economists had expected employment to climb by about 223,000 jobs, which would have matched the increase originally reported for the previous month.

The report also said the unemployment rate held at 5.3 percent in July, unchanged from the seven-year low set in June. The unchanged reading matched economist estimates.

"The July Jobs report is ok," said James Knightley, an economist at ING Bank. "It is strong enough to keep the September rate hike our central case, but we will need to see something similar or better next month to give the market reasonable confidence that it will indeed happen."

Among individual stocks, shares of Sprouts Farmers Market (SFM) have fallen sharply on the day after the grocery store chain provided disappointing guidance.

Auction house Sotheby's (BID) is also posting a steep loss after reporting second quarter results that came in below analyst estimates.

On the other hand, shares of Brooks Automation (BRKS) have moved sharply higher after the semiconductor equipment maker reported better than expected third quarter earnings and provided upbeat guidance.

Sector News

Biotechnology stocks have moved sharply lower over the course of the trading day, adding to the steep losses posted in the previous session. The NYSE Arca Biotechnology Index is down by 2.4 percent after hitting a nearly three-month low.

Alnylam Pharmaceuticals (ALNY) has helped to lead the biotech sector lower, tumbling by 15.6 percent after reporting disappointing second quarter results.

Substantial weakness also remains visible among tobacco stocks, as reflected by the 2.5 percent loss being posted by the NYSE Arca Tobacco Index. Universal (UVV) remains sharply lower after reporting a first quarter net loss.

Trucking stocks have also come under pressure on the day, dragging the Dow Jones Trucking Index down by 1.7 percent. The index is pulling back further off the three-month closing high set on Monday.

Health care, retail, and brokerage stocks are also seeing notable weakness in mid-day trading, while gold stocks continue to buck the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.3 percent and Hong Kong's Hang Seng Index advanced by 0.7 percent, while Australia's All Ordinaries Index tumbled by 2.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the French CAC 40 Index and the German DAX Index slid by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries have moved notably higher on the heels of the monthly jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5 basis points at 2.184 percent.