The major domestic equity indexes fell more than 2 percent on Friday in a broad sell-off led by declines in big Internet and technology shares. The equity indexes chalked up their largest weekly percentage declines since March as concerns over U.S.-China trade tensions and interest rates convulsed Wall Street.
The S&P 500 erased virtually all its gains from a week earlier, when the benchmark index notched its largest weekly rise in seven years.
Following a weekend truce between Washington and Beijing in talks in Argentina, stocks have been volatile all week as investors comb through the news looking for signs of whether a trade-tension cloud over the stock market would dissipate.
Concerns over U.S.-China trade relations were fanned by White House trade adviser Peter Navarro’s comments that U.S. officials would raise tariff rates if the two countries could not come to an agreement during a 90-day negotiating period.
Along with trade, Wall Street has been focused on bond yields and the direction of interest rate policy from the Federal Reserve, with some investors expecting a slower pace of hikes than previously anticipated.
Technology shares tumbled, with the S&P 500 tech sector index down 3.5 percent. The healthcare index was the largest gainer among major S&P sectors this year, fell 2.5 percent.
The S&P 500’s 50-day moving average fell below its 200-day moving average, a phenomenon known as a “death cross” and one that some market watchers see as a bearish near-term signal.
For the week, the Dow fell 4.5 percent, the S&P 500 slid 4.6 percent and the Nasdaq dropped 4.9 percent.
Government data indicated that job growth slowed in November and wages increased less than forecast, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Fed in 2019. The Fed is due to meet Dec. 18-19.
The S&P energy index fell 0.6 percent, supported by rising oil prices as Saudi Arabia and other producers in OPEC, as well as allies like Russia, agreed to reduce output to drain global fuel inventories and support the market.
In a closely watched initial public offering, shares of biotech company Moderna fell 19.1 percent in their debut.
Jobs Report Disappoints
Job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.
The Labor Department’s closely watched monthly employment report on Friday came against a backdrop of a steep sell-off on Wall Street and a partial inversion of the U.S. yield curve, which have stoked fears of a recession.
Nonfarm payrolls increased by 155,000 jobs last month, with construction companies hiring the fewest workers in eight months, likely because of unseasonably chilly temperatures.
Some of the moderation in hiring in November could be the result of a shortage of qualified workers. But it also fits in with other data showing a rise in layoffs in recent weeks and a decline in a measure of services sector employment in November.
Data for September and October were revised to show 12,000 fewer jobs added than previously reported. The unemployment rate was unchanged at near a 49-year low of 3.7 percent as more people entered the labor force.
Average hourly earnings rose six cents, or 0.2 percent in November. October wage gains were revised down to 0.1 percent from the previously reported 0.2 percent. In the 12 months through November, wages increased 3.1 percent, matching October’s increase, which was the largest gain since April 2009.
Companies also reduced hours for workers. The average workweek fell to 34.4 hours from 34.5 hours in October.
The employment report comes as soft October data on the housing market, business spending on equipment as well as a jump in the trade deficit to a 10-year high have heightened fears the economy is slowing. Growth forecasts for the fourth quarter are around a 2.7 percent annualized rate. The economy grew at a 3.5 percent pace in the third quarter.
In the wake of the employment report, the financial markets continued to price in one rate hike from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group’s FedWatch program.
The U.S. central bank is expected to increase borrowing costs on Dec. 18-19 for the fourth time this year.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, rose two-tenths of a percentage point to 7.6 percent.
Wage gains were moderate despite online retail giant Amazon.com Inc (AMZN.O) raising its minimum wage to $15 per hour for U.S. employees last month.
Job gains have averaged 170,000 per month over the past three months. The economy needs to create roughly 100,000 per month to keep up with growth in the working-age population. Employment growth could slow further in the months ahead.
The number of Americans applying for unemployment benefits is near eight-month highs. General Motors announced plans to cut up to 15,000 jobs in North America next year, which will affect some assembly plants in the United States.
Retail employment increased by 18,200 jobs in November, likely because of an early Thanksgiving. Transportation and warehousing payrolls rose by 25,400 jobs, driven by seasonal hiring.
However, an unusually cold November slowed hiring at construction sites. Construction employment rose by only 5,000 jobs after companies added 24,000 workers to their payrolls in October. Manufacturing employment increased by 27,000 jobs last month after rising 26,000 in October. Government payrolls declined for a second straight month.