Wall Street ends the week on a down note as jobs reports fade

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  • Jobs in the US increase more than expected in August
  • Wage growth is slowing, while unemployment is rising
  • Early gains disappear after Gazprom says supplies cannot be restarted

NEW YORK, Sept 2 (Reuters) – U.S. stocks ended the trading week lower on Friday, as early gains from a jobs report that showed a labor market may be starting to loosen gave way to worries about the European gas crisis.

Wall Street opened sharply higher after the August U.S. payrolls report showed stronger-than-expected hiring, but a rise in the unemployment rate to 3.7% eased some concerns that the Federal Reserve is being overly aggressive in raising interest rates as it tries to cut high inflation.

However, gains were erased after Gazprom ( GAZP.MM ), the state-controlled firm with a monopoly on Russian gas exports to Europe via pipeline due to restart on Saturday, said it could not safely restart supplies until it had fixed an oil leak found in a vital turbine and gave no new time frame. read more

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“Definitely the afternoon overshadowing the good data from this morning, the afternoon has been stolen from us by these headlines out of Europe,” said Zach Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Analysts also pointed to thin trading volumes ahead of the extended holiday weekend that helped exaggerate market moves.

“The setup is important, there has been some optimism around the European energy situation over the last week or so, long-term power prices have almost halved in some cases and signs that Germany had almost 80% of its storage full of gas, so it what we’re seeing is a slight position adjustment against that backdrop combined with low liquidity Friday afternoon going into a holiday weekend,” Hill said.

The Dow Jones Industrial Average (.DJI) fell 337.98 points, or 1.07%, to 31,318.44; The S&P 500 (.SPX) lost 42.59 points, or 1.07%, to 3,924.26; and the Nasdaq Composite (.IXIC) fell 154.26 points, or 1.31%, to 11,630.86.

Markets are closed on Monday for the Labor Day holiday.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 22, 2022. REUTERS/Brendan McDermid

Energy (.SPNY) was the only major S&P sector to end the session in positive territory, up 1.81%.

While payrolls topped expectations, average hourly earnings rose 0.3% compared with estimates of 0.4%, while the unemployment rate rose to 3.7% from a pre-pandemic low of 3.5%, indicating the Fed’s efforts to to front-load interest rate increases began. to take effect. read more

Wage growth data is seen as important to the Fed’s deliberations on raising interest rates as the central bank looks to bring inflation, which is at a four-decade high, back to its 2% target. Expectations for a third straight 75 basis point hike from the central bank at its September meeting fell to 56%, according to CME’s FedWatch Tool, down from 75% the previous day.

The focus now shifts to the consumer price report for August due in the middle of the month, the last major data available before the Fed’s policy meeting on 20-21. September.

Fears of aggressive policy tightening have sent stocks lower after hitting a four-month high in mid-August, with the S&P 500 (.SPX) down about 7% since the day before Fed chief Jerome Powell’s hawkish remarks last week on rate hikes. His views were later echoed by other politicians.

All three major indexes suffered their third straight weekly loss, as the Dow fell 2.99%, the S&P 500 fell 3.29% and the Nasdaq fell 4.21%.

Volume on US exchanges was 9.95 billion shares, compared to the 10.48 billion average for the full session over the past 20 trading days.

Falling issues outnumbered advancing ones on the NYSE by a ratio of 1.34 to 1; on the Nasdaq a 1.65 to 1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 14 new lows; The Nasdaq Composite registered 47 new highs and 184 new lows.

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Reporting by Chuck Mikolajczak; editing by Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

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