Friday February 4th


Dow futures decline more than 200 points as yields jump on jobs report

U.S. stock index futures fell as an unexpected surge in jobs in January spiked bond yields and reaffirmed to investors the Federal Reserve would continue with its plan to raise interest rates as soon as March. Futures on the Dow Jones Industrial Average fell 259 points, or 0.7%. S&P 500 futures lost 0.5%. Nasdaq 100 futures shed 0.1% despite a big gain in Amazon in premarket trading. The 10-year Treasury yield jumped above 1.89% after the January jobs report showed a 467,000 gain in payrolls. Economists polled by Dow Jones had expected a minor gain of 150,000 and some economists predicted a large decrease. Economists had cautioned before the report it could be noisy because of an omicron wave hitting while the survey was taking place. The 10-year yield has jumped from 1.51% to end 2021 as the Fed pivoted to more aggressively fight inflation, signaling it would slow down its bond buying and raise rates several times this year. Higher rates have weighed on stocks, especially tech shares with high valuations. The S&P 500 is down 6% this year. Futures fell despite several technology stocks posting huge premarket gains following strong quarterly results. Amazon jumped 12.4%, Pinterest surged more than 13% and Snap rocketed up around 46% the day after reporting earnings. In earnings news, Ford Motor missed estimates by a wide margin, with profit reported Thursday of 26 cents a share well below the consensus of 45 cents. Shares tumbled 5% in premarket trading. Friday’s moves come the day after a tech rout spurred by a disappointing earnings report from Facebook parent Meta. The company’s weak results sent the mega-cap tech stock lower Thursday and weighed on equity markets. After Facebook’s quarterly results, “everyone just gave up and sold the whole sector. That was clearly the wrong read,” Rich Greenfield of Lightshed Partners told CNBC’s “Closing Bell” on Thursday. “What’s going to be really interesting is how investors start to look at these companies more individually versus ... this whole sector.” On Thursday, the Nasdaq Composite, which is tilted towards tech shares, fell 3.7% for its worst daily performance since September 2020. The S&P 500 had its worst day in nearly a year, sliding 2.4%. The Dow Jones Industrial Average fell 518.17 points. “The sharp drop in FB market cap today and the accompanying drag on the S&P500 index is ... a stark reminder of the high concentration of mega-cap Tech stocks in the S&P 500 — and the vulnerabilities that such concentration brings,” Goldman Sachs’ Chris Hussey said in a note Thursday. Meanwhile, U.S. oil prices topped $90 per barrel for the first time since 2014, heightening inflation concerns. Shares in Asia-Pacific were higher on Friday as investors in the region shrugged heavy losses overnight on Wall Street that saw the tech-heavy Nasdaq Composite plunging nearly 4%. Hong Kong’s Hang Seng index led gains among the region’s major markets, rising 3.24% to close at 24,573.29. Markets in Hong Kong returned to trade on Friday after being closed for most of this week due to the Lunar New Year holidays. Over in mainland China, markets remain closed on Friday for the holidays. South Korea’s Kospi jumped 1.57% to close at 2,750.26. Elsewhere, the Nikkei 225 in Japan recovered from earlier losses, closing 0.73% higher at 27,439.99 while the Topix index climbed 0.55% to 1,930.56. Oil prices climbed on Friday, extending sharp gains in the previous session as frigid weather swept across large swathes of the United States, threatening to further disrupt oil supplies. Brent crude rose 34 cents, or 0.4%, to $91.45 a barrel by 0206 GMT, after rising $1.16 on Thursday. U.S. West Texas Intermediate crude rose 46 cents, or 0.5%, to $90.73 a barrel, having gained $2.01 cents the previous day to settle above $90 for the first time since Oct. 6, 2014. Both benchmarks are headed for their seventh straight weekly gain. Gold prices were supported by a weak dollar on Friday as markets awaited a vital U.S. jobs data that could impact the Federal Reserve’s latest hawkish stance on monetary policy. Spot gold edged up 0.1% to $1,806.47 per ounce by 0405 GMT. U.S. gold futures were up 0.2% at $1,807.20.