Stocks Reverse Lower As Jobs Report Sparks Interest Rate Worries

The major indexes erased gains and were sharply lower Friday, as this week’s rebound stalled. A strong October jobs report was strong, especially wage gains, reinforcing expectations of Fed rate hikes. Apple and dashed U.S.-China trade hopes also hit Wall Street.




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The S&P 500 was up 0.6% early Friday, but stumbled to a loss of 1% in afternoon trading. The Dow Jones industrial average also reversed lower, and was off 0.8%.

The Nasdaq composite has been the day’s weakest index, down 1.3%. Apple was responsible for much of the Nasdaq’s struggles. Apple shares gapped down after the company late Thursday issued weaker-than-expected holiday sales guidance and announced it will stop disclosing unit sales of iPhones and other products.

Apple shares were meeting resistance around the 50-day moving average, and now are deeper below the line. A chart base is possible for Apple, but so far it looks like a weak pattern.

Semiconductor and other technology stocks were weakest. The Philadelphia semiconductor index tumbled nearly 2%.

Small caps fared relatively better, but the Russell 2000 was still down 0.3%.

Volume was tracking higher on the Nasdaq and lower on the NYSE compared with the same time Thursday. Declining stocks led advancers by a 12-to-7 ratio on the NYSE and by 10-to-9 on the Nasdaq.

Invesco QQQ Trust (QQQ), the ETF that tracks the Nasdaq 100, was down 1.7%. Shares met resistance at the 200-day moving average Thursday and this morning. That may end up being the sign of a short-term peak in the market. The rebound this week ran out of steam after Apple’s earnings and this morning’s jobs report.

Jobs Report Beats Forecasts

The U.S. Labor Department said U.S. employers added 250,000 jobs in October, well above forecasts for 190,000. The unemployment rate held at 3.7%. While those were solid numbers, wage growth accelerated to the fastest pace since early 2009. That bit of data revived fears that the Federal Reserve will go ahead with a fourth interest-rate increase this year and keep tightening in 2019.

Selling intensified after White House economic advisor Larry Kudlow confirmed earlier reports that an agreement on trade issues with China remains elusive. Indexes were stabilizing around midday, but began a new leg lower after Kudlow’s remarks aired on CNBC.

On the IBD 50, nearly half the stocks were down more than 2%. Control4 (CTRL) was the most damaged. Shares of the home automation products  company plummeted 20% in big volume after the company announced quarterly results.

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