Mixed Jobs Data Continues To Weigh On Wall Street - U.S. Commentary

(RTTNews) - Following the rally seen over the course of the two previous sessions, stocks have shown a significant move back to the downside during trading on Friday. With the pullback, the major averages have once again turned negative for the New Year.

The major averages have recently climbed well off their worst levels of the day but remain firmly in the red. The Dow is down 150.95 points or 0.8 percent at 17,756.92, the Nasdaq is down 33.24 points or 0.7 percent at 4,702.95 and the S&P 500 is down 16.09 points or 0.8 percent at 2,046.05.

The weakness on Wall Street partly reflects a negative reaction to the Labor Department's closely watched monthly jobs report.

While a bigger than expected increase in employment contributed to a drop in the unemployment rate, the report also showed a slowdown in wage growth.

The Labor Department said non-farm payroll employment climbed by 252,000 jobs in December compared to economist estimates for an increase of about 245,000 jobs.

The stronger than expected job growth helped to push the unemployment rate down to a new six-year low of 5.6 percent.

However, the report also said the annual rate of average hourly earnings growth slowed to 1.7 percent in December, the slowest rate of growth since October of 2012.

The mixed data has led to some uncertainty about the outlook for monetary policy, leading some traders to cash in on the recent gains.

Rob Carnell, chief international economist at ING, said, "If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate."

"Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer and argue against any near-term increase in rates," he added.

Negative sentiment has also been generated by a sharp pullback by the price of crude oil, with crude for February delivery sliding $1.20 to $47.59 a barrel.

Sector News

Oil service stocks are turning in some of the market's worst performances amid the steep drop by the price of crude oil. Reflecting the weakness in the sector, the Philadelphia Oil Service Index is tumbling by 2.2 percent.

Within the oil service sector, Rowan (RDC) and Tidewater (TDW) are posting notable losses, falling by 3.7 percent and 3.5 percent, respectively.

Significant weakness also remains visible among brokerage stocks, as reflected by the 1.6 percent loss being posted by the NYSE Arca Broker/Dealer Index. The index is giving back ground after moving sharply higher in the two previous sessions.

Steel, banking, energy and airline stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

Meanwhile, gold stocks continue to buck the downtrend, with the NYSE Arca Gold Bugs Index surging up by 2.8 percent. The strength in the sector comes as gold for February delivery is climbing $8.70 to $1,217.20 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 1.1 percent, the French CAC 40 Index and the German DAX Index both slumped by 1.9 percent.

In the bond market, treasuries have moved notably higher amid the sharp pullback on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.2 basis points at 1.954 percent.