Wall Street dips on strong jobs and potential for rate hikes

NEW YORK (AP) — Stocks are slipping at the opening of trading on Wall Street Friday following a surprisingly strong report on the U.S. jobs market. The S&P 500 is 0.3% lower and on pace for its first drop in a week. The better-than-expected hiring helps calm some of the worries about a possible recession. However, the threat of an overheated economy likely keeps the Federal Reserve on track to continue raising interest rates sharply. Higher rates pressure all kinds of investments. The stocks that have been most vulnerable to rising interest rates had bigger drops. The Nasdaq fell 0.6%. Treasury yields jumped immediately following the job report’s release.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Wall Street is wavering ahead of the opening bell Friday before new hiring data is released for June, which is expected to show a pullback by employers compared with the post-virus outbreak boom of the past two years.

Futures for the Dow Jones industrials wavered between gains and losses of less than 0.1%, while the S&P 500 declined 0.2%.

The Labor Department is expected to report that the nation gained 275,000 jobs last month, according to economists surveyed by the data provider FactSet. That would be the lowest monthly gain of the past year, during which the job market has sustained a vigorous recovery from the pandemic recession. Before the pandemic struck in early 2020, monthly hiring that large would have been seen as a robust gain.

On Thursday, Labor data showed the number of Americans applying for unemployment benefits topped the 230,000 mark for the fifth consecutive week. It was the highest level in almost six months.

Tokyo’s main stock market index ebbed following the assassination of former Japanese prime minister, Shinzo Abe, but stayed in positive territory for the day. Abe, 67, died after being shot during a campaign speech Friday in western Japan.

The Nikkei 225 in Tokyo was up 0.6% at 26,654.15 at midday after a gunman shot Abe during a campaign event in the western Japanese city of Nara. The index was up 1.4% before the attack.

Abe, who oversaw an economic stimulus effort dubbed Abenomics, stepped down as prime minister in 2020.

The Shanghai Composite Index advanced 0.2% to 3,370.28 after Bloomberg News reported China might add 1.5 trillion yuan ($220 billion) to spending on public works construction this year to stimulate economic growth. The Hang Seng in Hong Kong added 0.2% to 21,694.17.

The Kospi in Seoul rose 0.9% to 2,346.14 and Sydney’s S&P-ASX 200 was 0.6% higher at 6,689.30.

India’s Sensex opened up 0.5% at 54,462.63. New Zealand and Southeast Asian markets advanced.

In Europe at midday, London’s FTSE was down 0.5% one day after British Prime Minister Boris Johnson announced his resignation following a series of departures from his Cabinet by members of his Conservative Party.

Germany’s DAX climbed 0.8% and France’s CAC rose 0.1%.

On Wall Street Thursday, the S&P 500 rose to 3,902.62 for its fourth daily increase. Roughly three-fourths of the stocks in the index gained.

The Dow Jones Industrial Average rose 1.1% to 31,384 and the Nasdaq composite advanced 2.3% to 11,621.35.

There is unease over aggressive U.S. and European interest rate hikes that being deployed to cool inflation because it runs the risk of derailing global economic growth.

Wall Street’s benchmark S&P 500 index rose 1.5% on Thursday after a member of the Fed panel that sets interest rates, James Bullard, said a “soft landing” for the economy was the most likely scenario. Another panel member, Christopher Waller, said “fears of a recession are overblown.”

“Investor recession fears ebbed,” said Robert Carnell and Iris Pang of ING in a report.

Bullard, who is president of the Federal Reserve Bank of St. Louis, said “it would make a lot of sense” to raise the U.S. central bank’s key interest rate by three-quarters of a percentage point, or triple the usual margin, at its meeting this month. That would repeat the dramatic mid-June rate hike, the Fed’s biggest in 28 years.

Waller, speaking at a separate event, said he also supported a 0.75-percentage-point hike. He said the Fed might risk “causing some economic damage,” but with a strong labor market, that shouldn’t be too big.

Bloomberg News reported China’s Ministry of Finance was considering a plan to allow local governments to raise money from bond sales to spend on building roads and other public works.

It wasn’t clear whether that represented additional spending or was future bond sales brought forward to help shore up economic growth some forecasters say fell close to zero in the quarter ending in June after anti-virus controls shut down Shanghai and other industrial centers.

Markets also have been on edge about Russia’s invasion of Ukraine, which sent oil and other commodity prices soaring in recent months.

In energy markets, benchmark U.S. crude reversed course, losing 22 cents to $102.51 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $4.20 to $102.73 on Thursday. Brent crude, the price basis for international trading, was essentially unchanged at $104.97 per barrel in London. It advanced $3.96 the previous session to $104.65.

The dollar declined to 135.91 yen from Thursday’s 136.11 yen. The euro edged down to $1.0145 from $1.0156.

Shares of GameStop, which jumped 15% on Thursday after it announced a 4-for-1 stock split, slid more than 5% in premarket trading after Michael Recupero, the chief financial officer at the video game retailer, was ousted abruptly.

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