Eyes on Wall Street open lower after data on soft jobs

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Wall Street’s major indices were set to slide open on Friday after data showed weaker-than-expected job growth, while wage growth raised concerns about higher inflation.

A report by the Ministry of Labor shows that non-farmers’ payrolls increased by 199,000 jobs in December, although the unemployment rate fell to 3.9% from 4.2% in November, stressing tighter labor market conditions.

Economists polled by Reuters expected non-agricultural payrolls to increase by 400,000 jobs in December. Average earnings per hour increased by 0.6% compared to expectations of 0.4%.

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“The main line is disappointment, but labor market growth remains strong,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York City.

“Hourly wages aren’t falling much, suggesting the Fed isn’t likely to be upset by this headline.”

The data comes after the minutes from the December meeting of the Federal Reserve signaled that the central bank may have to raise interest rates sooner than expected amid a “very tight” labor market and unabated inflation.

Hawk’s tone has spurred U.S. Treasury yield growth, while prompting investors to replace high-tech stocks with more cyclical market segments such as energy, finance and industries that tend to do better in a high-interest environment.

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Futures on Fed funds imply a 90% chance of a 25-point tightening at the Fed’s March meeting and at least three rate increases by the end of the year.

Shares of Occidental Petroleum and Citigroup rose 1.0% and 0.6%, respectively, in pre-market trading, the leading growth among large oil and banking companies.

The energy sector S&P 500, which has gained 9% so far this week, has been set for the best weekly growth in the last ten months. The broader value index added 0.8% this week, surpassing its counterpart of growth, which expects its worst week since the end of February 2021.

At 8:58 a.m. Eastern Time, the Dow e-mini was down 62 points, or 0.17%, the S&P 500 e-mini was down 11.25 points or 0.24%, and the Nasdaq 100 e-mini was down burns by 88.5 points or 0.56%.

All three major Wall Street indexes are set to fall weekly.

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Mega-cap technology titans Apple Inc., Microsoft Corp., Amazon.com Inc. and Tesla Inc. have been mixed, after the big losses they suffered this week.

GameStop Corp’s meme stock jumped 18.7 percent after a video game vendor said it was launching a non-functional token (NFT) market development department and establishing a cryptocurrency partnership.

Starbucks Corp fell 2.4% after RBC lowered the specialty coffee trader’s stock to “sector performance” from “outperforming” in margin estimate and outlook.

Discovery Inc. added 5.3% after Bank of America increased the media company’s shares to “buy” from “neutral”. (Reporting by Devik Jain of Bengaluru and Stephen Culp of New York; editing by Maja Samuel)