Stocks Decline on Fed Concerns, European Gas Woes: Markets Wrap

Stocks Decline on Fed Concerns, European Gas Woes: Markets Wrap


(Bloomberg) — Stocks fell, with major indexes headed for a third weekly decline, after jobs data did little to alter views on the Federal Reserve’s next policy move. A delay in the opening of a key gas pipeline to Europe also weighed on sentiment ahead of a three-day weekend for American markets.

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The S&P 500 pushed lower in the afternoon. It had climbed as much as 1.3% after employers added 315,000 jobs last month, slightly above what economists expected. The two-year yield tumbled below 3.5% as the jobs report showed wage growth slowed, potentially signaling some softening in labor demand.

The labor-market data add to a bevy of reports this week that validate the Fed’s assertion that the economy is robust enough to withstand more tightening. Risk assets have been under pressure since Fed Chair Jerome Powell made clear the central bank will raise rates further and keep them elevated until price gains slow. Despite the reassuring report, markets are still pricing in the likelihood of a three-quarters of a percentage point interest-rate hike this month.

And in a massive blow to Europe, Russia’s Gazprom PJSC said its key gas pipeline to Europe can’t reopen as planned on Saturday as a new technical issue has been discovered. The news moves the region a step closer to blackouts, rationing and a severe recession.

Investors are already concerned about the European Central Bank possibly raising rates by three-quarters of a percentage point next week. That, combined with the restriction of natural gas supplies and escalating US-China tensions has worried investors, said Sam Stovall, chief investment strategist at CFRA Research.

Traders “don’t want to take extended long positions and thereby potentially be exposed over the long weekend,” he said.

Concern that rising rates will hurt growth has already weighed on markets, pushing global bonds into their first bear market in a generation. The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds down more than 20% from a 2021 peak.

Some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.7% as of 1:37 p.m. New York time

  • The Nasdaq 100 fell 1.1%

  • The Dow Jones Industrial Average fell 0.7%

  • The MSCI World index fell 0.8%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.1% to $0.9956

  • The British pound fell 0.3% to $1.1510

  • The Japanese yen was little changed at 140.13 per dollar

Bonds

  • The yield on 10-year Treasuries declined six basis points to 3.20%

  • Germany’s 10-year yield declined four basis points to 1.53%

  • Britain’s 10-year yield advanced four basis points to 2.92%

Commodities

  • West Texas Intermediate crude rose 1% to $87.51 a barrel

  • Gold futures rose 0.8% to $1,723.10 an ounce

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