Stock futures rise after important jobs report
US stocks were hammered on Friday after the key jobs report came in warmer than expected and unease over the stunning failure of Silicon Valley Bank (SIVB) continued to weigh on markets.
Checking back in on the S&P 500 (^GSPC) around ET, the index was down 1.5%, while the Dow Jones Industrial Average (^DJI) fell 1.2%. Contracts with the technology-heavy Nasdaq Composite (^IXIC) fell by 1.8%.
Bond yields fell. The yield on the benchmark 10-year US Treasury bond fell to 3.71% on Friday.
Wall Street digested two major events in the financial world on Friday: the jobs report and the unfolding saga of Silicon Valley Bank, which became the largest financial institution to fail since the 2008 financial crisis.
Friday̵[ads1]7;s February jobs print beat expectations once again, as the U.S. economy added 311,000 jobs, a slower pace from January’s blowout number and compared to a consensus estimate from economists for job gains of 225,000. The unemployment rate rose to 3.6% , and wage growth rose 4.6% on an annual basis, slower than expected.
“Just going to first principles. Labor markets are undeniably strong. Over the past three months, non-farm payrolls have averaged 351,000,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in a statement.
“Full-time employment has increased by an average of 442,000 per month this year. Given the increase in participation and decline in wage growth (mostly a composition story), I can see why the soft-landing bulls are running with today’s report, especially given the setup is getting underway, but let’s say obvious, the Fed’s work isn’t done. Terminal rates are still going up. Oh, and it’s time to hit the mute button on people talking about weather, impending recession and calling the no-landing story a hoax,” he added.
Notable job gains were in leisure and hospitality, retail, government and health care, while employment lagged in information, transportation and warehousing, the Bureau of Labor Statistics reported.
The Federal Reserve has been keeping a close eye on all fronts of the labor market as the central bank tries to cool inflation. February’s jobs report continued to reveal the hot hiring streak, even as other recent government data points to the economy picking up steam. Economists viewed the payrolls release as a report that would show whether the hiring gains were an outlier or the start of economic acceleration.
The accumulation of economic data, combined with comments this week from Chairman Jerome Powell, has fueled debate over whether a 0.25% or 0.50% Fed rate hike is likely for the March meeting.
According to the CME FedWatch tool, market participants are betting that the Federal Reserve will move a quarter-point rate hike at its next meeting.
However, recent events in the banking world have spurred other concerns for Fed officials as their monetary tightening induces stress in the banking system.
On Friday, US banking regulators took control of Silicon Valley Bank, as the lender failed in its attempts to raise new capital. Treasury Secretary Janet Yellen said Friday that she is overseeing a “few banks” amid the crisis at Silicon Valley Bank.
The bank’s share price fell 68% during Friday’s pre-market trading before it was halted.
The sour sentiment has spread across markets as the KBW Bank Index (^BKX) fell more than 2%, while index members including Bank of America (BAC), JPMorgan Chase (JPM) bounced back on Friday during midday trading. Shares of First Republic Bank (FRC) fell 51% and the stock was halted due to volatility. Other regional bank stocks have also been halted, including PacWest Bancorp, Western Alliance Bancorp and Signature Bank.
In other individual stock moves, Allbirds ( BIRD ) shares plunged 46% after the shoe retailer posted a disappointing quarterly report that included a double-digit drop in sales, revealing an annual loss of $101 million. There is also an upheaval in management as CFO Mike Bufano is leaving the company.
Shares of DocuSign ( DOCU ) fell 19% after analysts at JPMorgan downgraded the stock, citing a disappointing demand outlook. Despite an earnings and revenue beat, CFO Cynthia Gaylor announced she would be stepping down this year.
Elsewhere, in the cryptocurrency market, Bitcoin (BTC-USD) crumbled below $20,000 on Friday amid the liquidation of Silvergate Capital (SI) and regulatory pressure on the industry.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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