In a turbulent session of midday trading on Friday, US equity indexes witnessed a downward trend as investors focused on the upcoming comments from Federal Reserve Chair Jerome Powell. The scrutiny intensified following the revelation that the economy added fewer jobs than analysts anticipated in February, and the unemployment rate experienced a slight uptick. The Nasdaq Composite suffered a decline of 1.2%, landing at 17,845.2, while the S&P 500 faced a 1% drop to 5,685.4.
Meanwhile, the Dow Jones Industrial Average was not spared, decreasing by 0.6% to finish at 42,273.3. Among the sectors, financials, communications services, and consumer discretionary emerged as the steepest decliners intraday, contrasting against energy and utilities, which marked the only sectors to register gains. Anticipation builds as Powell prepares to deliver a presentation on the "Economic Outlook" at the University of Chicago Booth School of Business, scheduled for 12:30 pm ET. The Bureau of Labor Statistics reported that nonfarm payrolls rose by 151,000 last month, a figure that fell short of the consensus expectation of a 160,000 increase according to a survey conducted by Bloomberg.
Additionally, the unemployment rate nudged up to 4.1%, an increase from January's 4%, aligning with market projections for February. TD Economics Senior Economist Thomas Feltmate expressed concerns, noting, "Job growth is likely to soften over the coming months, as federal layoffs related to the Department of Government Efficiency continue to mount and ongoing trade policy uncertainty will weigh on near-term hiring intentions." This statement underlines the anticipated challenges in the labor market. The report also highlighted a 0.3% sequential growth in average hourly earnings, which matched the street’s expectations.
However, the year-over-year increase fell short at 4%, compared to the 4.1% rise predicted by analysts. Feltmate further commented on the financial markets, stating, "Increasing concerns about slowing growth prospects have emerged in recent weeks, with fed futures now fully pricing in three (25-basis-point) rate cuts by year-end." Nonetheless, he cautioned that the Fed may remain unmoved by recent market volatility, especially considering potential fiscal policy adjustments that could exacerbate the already elevated inflation pressures. As the session progressed, most US Treasury yields experienced a dip.
The 10-year yield fell by 4.6 basis points to reach 4.24%, while the two-year rate saw a decrease of 5.1 basis points to settle at 3.91%. On a different note, West Texas Intermediate crude oil futures reflected an upward trend, climbing by 1.1% to $67.11 per barrel..