U.S. stocks fell after the latest batch of labor market data showed that employment continued at a strong pace last month, which strengthened expectations for a sharp tightening of the Federal Reserve’s monetary policy.
The blue-chip S&P 500 index fell 1.7 percent, while technology-based Nasdaq joint index fell 2.7 percent.
According to the Department of Labor, the world’s largest economy added 390,000 jobs last month, down from 436,000 in April. However, May figures still exceed 325,000 expectations.
As investors assess how quickly the central bank expects interest rates to rise, jobs are paying close attention to the market situation. Policymakers have already raised the central bank’s key rate by 0.75 percentage points this year, and are expected to pursue monetary policy more tightly as it seeks to reduce inflation. As the central bank seeks to grow maximum employment, overheated jobs could exacerbate market inflationary pressures.
Peter Bougainville, chief investment officer at Flickly Advisory Group, noted that while the numbers may not be a “blowout” performance, they still strengthen expectations for an “aggressive Fed response”.
US government debt was under some selling pressure following the jobs report, with the yield on the monetary policy sensitive two-year Treasury index rising 0.05 percentage points to 2.68 percent. The 10-year yield, which closely monitors the long-term economic outlook, rose 0.05 percentage points to 2.96 percent.
Both of these benchmark bond yields have been rising since the beginning of the year, but have fallen back to their recent highs.
Among stocks, Tesla’s shares fell about 5 percent after opening Reuters reported Elon Musk said employees have a “very bad feeling” about the economy and that the automaker will have to cut 10 percent of its workforce.
Meanwhile, regional Stoxx Europe 600 gauge dropped previous gains, ending the previous session 0.6 percent higher and lower for the day. Following the opening of the United States, Germany’s docs weakened. Like the mainland markets in Hong Kong and China, the UK markets were closed for public holidays.
European stocks began to fall after April Eurozone retail sales fell 1.3 percent from a month earlier, the first monthly decline since the beginning of the year. On an annual basis, sales rose 3.9 percent. According to a Reuters poll, economists expect a monthly increase of 0.3 percent and an annual increase of 5.4 percent.
ING analysts say weak consumer confidence and high inflation have weighed on the region’s economy. “While this decline may exacerbate total consumption growth, it provides further evidence of a severe eurozone recession,” they wrote.
Retail sales continued to be stronger than expected from Germany, with the country’s exports rising 4.4 percent between March and April.
Brent crude is close to $ 118 a barrel. Opec and its allies reached an agreement on Thursday Accelerates oil production In July and August. The dollar, which measures the US currency against a basket of six people, rose 0.2 percent.
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