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Market Snapshot

June 4, 2022, 5:20 a.m. EDT

Dow ends down nearly 350 points as stocks suffer weekly losses after strong May jobs report

By William Watts and Barbara Kollmeyer

U.S. stocks fell sharply Friday, leaving major indexes with weekly losses, after better-than-expected May payrolls data reinforced expectations for a series of interest-rate rises by the Federal Reserve in coming months.

The technology sector led the way south as Treasury yields rose and a report that Tesla Inc. may be considering job cuts amid CEO Elon Musk’s misgivings about the economic outlook.

How are stocks trading?

  • The Dow Jones Industrial Average (DOW:DJIA) fell 348.58 points, or 1%, to end at 32,899.70, dragging the blue-chip gauge to a 0.9% weekly fall.

  • The S&P 500 (S&P:SPX) dropped 68.28 points, or 1.6%, to close at 4,108.54, leaving it with a 1.2% weekly loss.

  • The Nasdaq Composite (NASDAQ:COMP) shed 304.16 points, or 2.5%, finishing at 12,012.73. The tech-heavy index, which fell into a bear market earlier this year, suffered a 1% weekly decline.

Mark Hulbert: Stock-market timers have been too quick to leap into the rally — and that’s a risky sign

What’s driving markets?

May nonfarm payrolls rose a bigger-than-expected 390,000 data, versus expectations for a gain of 328,000, from an upwardly revised gain of 436,000 in April. The unemployment rate was unchanged in May at 3.6% and average hourly earnings rose 0.3% to $31.95 in May.

While wage gains slowed slightly to 5.2% year over year from 5.5%, they likely remain “too strong for policy makers to take their foot off the brake,” said Matt Peron, director of research at Janus Henderson Investors.

“While it does show evidence of ‘peaking’ inflation, it is still an uncomfortably high number. As a result, rate hikes are still going to be a headwind for markets to contend with until we see further deceleration,” he said in emailed comments.

Investors didn’t appear to be in the mood to welcome a Goldilocks set of jobs data, analysts said.

“The jobs release sent affirmation to investors that the recovery continues in full force. The flip side to that coin, however, is that inflation will continue to be an issue due to strong demand from consumers, wage pressures, and rising commodity prices,” said Peter Essele, head of portfolio management at Commonwealth Financial Network.

Those worries were on display in the bond market as inflation-wary investors sold Treasurys across the board, he said. The yield on the 10-year Treasury note (XTUP:BX:TMUBMUSD10Y) rose 5 basis points to 2.961%. Yields and debt prices move opposite each other.

“The second half of 2022 is going to be a roller-coaster ride for investors unless the Fed is able to bring inflation under control without a hard landing,” Essele said. “Most investors seem to be wagering on a crash-and-burn scenario at this point as recessionary fears abound, and equity markets fail to develop any sort of positive momentum.”

In other data, the Institute for Supply Management said its services index fell to 55.9% in May from 57.1% a month earlier.

Another focus for markets on Friday was a report that Musk, according to Reuters, sent an email to executives ordering them to “pause all global hiring,” and that employee head count needed to be reduced by 10%. He also reportedly said he had a “super bad feeling” about the economy.

Weakness in Tesla (NAS:TSLA) shares, which fell 9.2%, weighed on the Nasdaq.

See: Biden dismisses Elon Musk’s ‘super bad feeling,’ wishes SpaceX boss ‘lots of luck on his trip to the moon’

A gloomy tone was sounded on Wall Street. JPMorgan Chase CEO Jamie Dimon earlier this week warned of an “economic hurricane,” coming due to inflation, the war in Ukraine and tighter monetary policy.

BlackRock Inc. CEO Larry Fink  told Bloomberg  on Thursday that he expected elevated inflation for years and that “bouts of fear” would continue to create more market volatility.

Need to Know: Fink, Dimon and Musk have the blues. And one forecaster says they’re not gloomy enough

Which companies are in focus?

  • Coinbase Global Inc. (NAS:COIN) shares fell 9.7% after the crypto exchange announced an indefinite hiring freeze , a day after the billionaire Winklevoss twins announced cuts at their own crypto firm, Gemini.

  • CrowdStrike Holdings Inc. (NAS:CRWD) shares lost 6.8% even after the security-software company reported earnings , sales and a forecast that beat expectations and boosted annual guidance.

  • Shares of Lululemon Athletica Inc. (NAS:LULU) were dragged down 0.6%, despite the company reporting sales that were better than Wall Street expected , with direct-to-consumer sales getting to be a slightly bigger chunk of the retailer’s revenue.

  • American Airlines Group Inc. (NAS:AAL) stock fell 7.1%, after the airline raised its revenue growth , but cut capacity guidance and raised its fuel-cost estimate.

  • Shares of Turning Point Therapeutics Inc. more than doubled, rising 118.4%, after the clinical-stage oncology company agreed to be acquired by biopharmaceutical company Bristol-Myers Squibb Co. (NYS:BMY) in an all-cash deal valuing Turning Point at about $3.77 billion. Bristol Myers shares edged up 0.1%.

How are other assets trading?

  • U.S. crude (NYM:CL.1) rose 1.7% to finish at $118.87 a barrel.

  • The ICE U.S. Dollar Index  (IFUS:DXY) rose 0.3%

  • Bitcoin (COINDESK:BTCUSD) fell 3.1% to trade below $29,600.

  • The Stoxx Europe 600 index (STOXX:XX:SXXP) ended 0.3% lower, losing 0.9% for the week; London markets were closed for an extended Queen’s Jubiliee bank holiday celebration.

  • Markets in China and Hong Kong were also closed for a holiday. The Nikkei 225 index (NIKKEI:JP:NIK) rose 1.2%.

See: These 10 cheap stocks are favorites of top investment newsletters, as value keeps pounding growth

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