Dow futures fall 300 points as rates pop on September’s jobs report
U.S. stock markets index futures fell on Friday morning as traders evaluated September’s jobs report, which showed the unemployment rate continuing to decline and sparked an increase in interest rates. Dow Jones Industrial Average futures fell 300 points, or 1%. S&P 500 futures lost 1.3%, while futures tied to the Nasdaq 100 slipped 1.8%. Friday’s jobs numbers showed the U.S. economy added 263,000 jobs in September, slightly below a Dow Jones estimate of 275,000. However, the unemployment rate came in at 3.5%, down from the 3.7% in the previous month in a sign that the jobs picture continues to strengthen even as the Federal Reserve tries to slow the economy with rate hikes to stem inflation. The falling unemployment rate sparked a jump in rates, in turn weighing on futures. The 2-year year Treasury yield jumped 8 basis points to 4.31%. (1 basis point equals 0.01%.) Advanced Micro Devices’ stock fell in overnight trading after the chipmaker warned its third-quarter revenue would be lower than anticipated. Levi Strauss shares slipped following a cut to its guidance. Major averages closed lower during Thursday trading but are on pace to cap their best week since June 24 and finish about 4% higher. The Dow fell 346.93 points, or 1.15%, to 29,926.94, while the S&P 500 and Nasdaq Composite shed 1.02% and 0.68%, respectively, on Thursday. All major S&P sectors finished the session in negative territory, with the exception of energy. The sector rose 1.8% as oil prices gained and is on pace to close out the week 14.7% higher. “The environment is ripe for a crisis and if the Fed keeps its hawkish communication up I think we’re quite likely to have something break in the financial markets,” Scott Minerd, Guggenheim’s global chief investment officer said on CNBC’s “Closing Bell: Overtime” on Thursday. Minerd said the pace of tightening is beginning to create cracks in the financial markets and could force a Fed pivot in the coming weeks. “All the signs are there,” he said. “I can’t tell you exactly what will cause it, but the environment is ripe and when the Fed pivots, they’re not going to preannounce it, they’re not going to ring a bell.” Shares in the Asia-Pacific fell on Friday ahead of the monthly U.S. jobs report, which is likely to guide the Federal Reserve’s monetary decision in November. Hong Kong’s Hang Seng index lost 1.27% in the final hour of trade and the Hang Seng Tech index shed 2.96%. The Nikkei 225 in Japan fell 0.71% to 27,116.11 and the Topix index slipped 0.82% to 1,906.80. In Australia, the S&P/ASX 200 fell 0.8% to 6,762.80. South Korea’s Kospi lost 0.22% to 2,232.84 while the Kosdaq dropped 1.07% to 698.49. Markets in mainland China remain closed for a holiday. Oil rose on Friday and was headed for a second consecutive weekly gain supported by OPEC+’s decision to make its largest supply cut since 2020 despite concern about recession and rising interest rates. The cut from the Organization of Petroleum Exporting Countries and allies including Russia, known as OPEC+, comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market. Brent crude was up $1.31, or 1.3%, to $95.75 a barrel. U.S. West Texas Intermediate or WTI crude also gained $1.35, or 1.5%, to $89.83. Gold prices were stuck in a tight range on Friday as investors braced for a U.S. jobs report, which could influence the Federal Reserve’s rate hike trajectory. However, bullion was still on track for its best week since March, helped by a retreat in the dollar and U.S. Treasury yields. Spot gold was about flat at $1,710.30 per ounce. Prices have risen about 3.3% so far this week. U.S. gold futures were down 0.2% at $1,718.10.