S&P 500 Opens Higher After Jobs Report
U.S. stocks ticked higher in the wake of new data showing employers added more than 1 million jobs last month, suggesting the economic recovery remains intact.
The S&P 500 broke above the flatline, rising about 0.1% following the release of the latest employment figures. The broad market gauge on Thursday dropped 3.5% in its biggest retreat since June 11, leaving the S&P 500 on track for its first weekly loss in six weeks. The Dow Jones Industrial Average rose 0.6%, but the Nasdaq Composite Index fell 0.2%.
U.S. employers added 1.4 million jobs in August, knocking the unemployment rate down to 8.4%. Although last month’s jobs gains weren’t far off from economists’ estimates, the data suggested the economic recovery from the shock of the coronavirus pandemic would be more drawn out in the months ahead. State reopenings helped boost employment by a combined 7.5 million payrolls in May and June before hiring growth slowed in July.
“It’s a partial and incomplete recovery so far,” said Agnès Belaisch, chief European strategist at the Barings Investment Institute. She is watching to see if the so-called participation rate rises, which would indicate Americans who had stopped looking for work are re-entering the workforce.
Ahead of Friday’s open, stocks were already reeling from a tech-driven selloff that had pummeled the shares of many companies that drove the rally from the market’s lows of March. A record $180 billion was erased from Apple’s market valuation Thursday after the stock dropped 8%. That is the most that any American company has ever lost in a single day. Despite the rout, Apple’s stock is up 65% this year. The shares dropped another 2.6% in premarket trading.
Tesla shares fell 5% ahead of the New York opening bell. Chipmaker Nvidia also retreated nearly 4%, after tumbling 9.3% Thursday.
Investors are gauging an incomplete economic recovery and reassessing valuations that had decoupled from corporate fundamentals, according to Samy Chaar, chief economist at Lombard Odier.
“In the past few weeks, there’s been a big trade on newer technology that wasn’t built on a lot,” Mr. Chaar said. “We saw the worst of the [economic] shock. But what I would add to that is that we’ve seen the best of the recovery.”
The Cboe Volatility Index, a gauge of expected turbulence in the S&P 500, hovered near its highest level since late June.
The bout of volatility is unlikely to be the start of a downtrend, in part because institutional investors still have further room to boost their exposure to stocks, said Sophie Huynh, cross-asset strategist at Société Générale. “For now I think the selloff could be fairly limited,” she said.
The yield on 10-year Treasury notes ticked up to 0.646%, from 0.621% Thursday, ahead of the jobs report. Yields rise as bond prices fall. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, was steady.
Prices for Brent crude slipped 0.1% to $44.05 a barrel. That still puts the international oil benchmark on course to lose 3.5% this week. That would be its biggest weekly decline since mid-June. A swift recovery in fuel consumption by U.S. drivers is petering out, posing new challenges to the oil market, economy and energy industry.
International markets were mixed. The Stoxx Europe 600 slid 0.2%, led lower by German shares.
In Asia, Japan’s Nikkei 225 closed down 1.1%, South Korea’s Kospi Composite lost 1.2% and China’s Shanghai Composite fell 0.9%. Australia’s S&P/ASX 200 fell 3.1%, in its worst session since the start of May.
The pullback in stocks bears similarities to an earlier retrenchment in June, said Eli Lee, head of investment strategy at Bank of Singapore. He doesn’t see scope for a deep correction.
“In the longer term, low interest rates and the gradual recovery in the global economy will be supportive for risk assets,” said Mr. Lee.
—Chong Koh Ping contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
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