Whiplashed Wall Street grapples with mixed payroll data

Employment in the United States grew by 199,000 less than expected last month due to the impact of a resurgent pandemic, well below the 400,000 predicted by economists, but data for November has been revised on the rise. The unemployment rate fell to 3.9%, underscoring tighter labor market conditions.

“Today’s report should be revealing for the Fed, as the tough working conditions will only exacerbate the building inflation problem,” Charlie Ripley, senior investment strategist at Allianz Investment Management told Minneapolis.

“It would be surprising if the Fed did not consider a quicker removal of political accommodations at the January meeting.”

Bank stocks extended their gains, and struggling tech stocks rebounded from steep declines this week. The Dow Jones Industrial Average rose 82.16 points, or 0.23%, to 36,318.63, the S&P 500 lost 10.73 points, or 0.23%, to 4,685.32 and the Nasdaq Composite lost 113.49 points, or 0.75%, to 14,967.38.

It has already been a confusing week for equities. After a new highs start to 2022, the mood changed on Wednesday after the December Fed meeting minutes signaled the central bank may have to raise interest rates sooner than expected .

Wall Street stabilized Thursday night, although analysts at ING Bank said the minutes still trickle into markets, pushing bond yields higher, hurting growth stocks and supporting the dollar.

The MSCI All Country stock index was flat at 744.20 points, down nearly 2% from Tuesday’s record. In Europe, the STOXX index lost 0.4% to 486.3 points, also around 1.6% from a record Tuesday.

SUPPLY ISSUES

Longer-term Treasury yields rose again on Friday, but shorter-term government bonds fell after US non-farm wages. Analysts said the report was strong enough to keep the Fed on track to raise interest rates at its March meeting.

The benchmark 10-year Treasury yield was 1.785%, compared to 1.7461% before the wage data.

Eurozone inflation unexpectedly rose to 5% last month from 4.9% in November, a record for the monetary bloc, although unlike the Fed, the European Central Bank says prices will ease enough this year to avoid having to raise rates.

The dollar index fell 0.44% to 95.832, erasing its earlier gains for the week.

Oil prices edged down on Friday as the market weighed in over supply concerns over unrest in Kazakhstan and blackouts in Libya against a US jobs report that fell short of expectations and to its potential impact on Federal Reserve policy.

Reversing the big gains slightly to start 2022, US crude fell 0.88% to $ 78.76 a barrel and Brent was at $ 81.62, down 0.45% on the day. [O/R]

Spot gold was $ 1,792 an ounce, slightly firmer the day after hitting a two-week low at $ 1,788.25 on Thursday, as rising U.S. Treasury yields hurt the market. demand for non-interest bearing metal.

Bitcoin fell 5% on Friday to its lowest level since late September, amid a broader sell-off in cryptocurrencies prompted by concerns over the tightening of US monetary policy.

Bitcoin was last around 3% to $ 41,837 after hitting $ 40,938, its lowest since September 29, as payroll data fueled some bargain buys.

(Reporting by Lawrence Delevingne; Editing by Jonathan Oatis and Alison Williams)

By Laurent Delevingne

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