The United States stock market on Wall Street. New York closed down at the end of trading Friday (2/9/2022) local time so that it experienced its third weekly decline after the US employment data did little to change the view on the Federal Reserve’s next policy.
Based on Bloomberg data , Saturday (3/9/2022), the Dow Jones Industrial Average closed down 1.07 percent or 337.98 to 31,318.44, the S&P 500 slipped 1.07 percent or 42.59 points to 3,924.26, and the Nasdaq fell 1.31 percent, or 154.26 points, to 11,630.86.
The S&P 500 posted its longest weekly decline since mid-June 2022, as the central bank’s hawkish signals grew louder in recent days. The index also ended lower Friday, erasing gains reached earlier in the session after the jobs report showed some signs of easing in the US labor market.
Meanwhile, US government bond prices are rallying, led by series with short maturities. The policy-sensitive two-year yield ended the week nearly at the start of the week, having topped the previous 3.5 percent.
US labor market data released Friday adds to this week’s pool of reports that validate the Fed’s assertion that the economy is strong enough to withstand further tightening. The risk asset market has been under pressure since Fed Chair Jerome Powell made it clear that the central bank will raise interest rates further and hold them in place until price gains slow. Despite the reassuring report, the market is still pricing in the possibility of a three-quarter percentage point rate hike this month.
“Unemployment remains relatively low, but the cause may be minimal labor force participation rather than a booming economy. Investors will note that the jobs report is an often strong lagging indicator heading into a recession. Indeed, broader economic indicators have weakened recently,” said Richard Flynn, managing director at Charles Schwab UK.
Meanwhile, Europe took another hit as Russia’s Gazprom PJSC said its main gas pipeline to Europe could not reopen as planned on Saturday because a new technical problem had been discovered. The news brought Europe one step closer to blackouts, rationing and a severe recession.
Sam Stovall, chief investment strategist at CFRA Research, said investors were already worried about the possibility of the European Central Bank raising interest rates by three-quarters of a percentage point next week. That combined with curbs on natural gas supplies and rising US-China tensions have worried investors.
Worries that a rate hike will hurt growth have weighed on markets, pushing global bonds into their first bear market. The Bloomberg Global Aggregate Total Returns Index of investment-grade government and corporate bonds is down more than 20 percent from their peak in 2021.