U.S. stocks retreated on Friday after the crucial jobs report came in hotter than expected and jitters over the resounding failure of Silicon Valley Bank (SIVB) continued to weigh on markets.
Back on the S&P 500 (^GSPC) around 1:00 p.m. ET, the index turned red 1.5%, while the Dow Jones Industrial Average (^DJI) fell 1.2%. Contracts with the technology-heavy Nasdaq Composite (^IXIC) were down 1.8%.
Bond yields fell. The yield on the benchmark 10-year US Treasury fell to 3.71% on Friday.
Wall Street digested two major events in the financial world on Friday: the jobs report and the developing saga of Silicon Valley Bank, which became the largest financial institution to fail since the 2008 financial crisis.
Friday’s February jobs print once again beat expectations, with the US economy adding 311,000 jobs, a slower pace from January’s booming figure, and from consensus estimates by economists for job gains of 225,000. The unemployment rate edged up to 3.6% and wage growth rose 4.6% on an annual basis, slower than expected.
“Just go to first principles. Labor markets are undeniably strong. Over the past three months, nonfarm payrolls have averaged 351,000,” wrote Neil Dutta, head of economics at Renaissance Macro Research, in a statement.
“Full-time employment has grown by an average of 442,000 per month this year. Given the rising labor force participation rate and slowing wage growth (mostly a story of composition), I can see why the Soft landing bulls work with today’s report, especially considering the setup is underway, but let’s face it, the Fed’s job is not done Terminal rates continue to rise. Oh, and it’s time to hit the mute button for people talking about the weather, the impending recession and calling the No. -The D-Day story is a hoax,” he added.
Notable employment gains were recorded in leisure and hospitality, retail, government and healthcare, while employment lagged in information, transportation and warehousing , reported the Bureau of Labor Statistics.
The Federal Reserve has been closely watching all fronts in the labor market as the central bank tries to calm inflation. The February jobs print continued to show the hiring streak, even as other recent government data indicate the economy is picking up steam. Economists viewed the payrolls release as a report that would show whether the hiring gain was an outlier or the start of an economic acceleration.
The accumulation of economic data, coupled with comments this week from Chairman Jerome Powell, has sparked debate over the likelihood of a 0.25% or 0.50% rate hike from the Fed for its February meeting. March.
According to CME tool FedWatch, market participants are betting that the Federal Reserve will hike rates by a quarter point at its next meeting.
However, recent events in the banking world have raised further concerns among Fed officials as their monetary tightening policy is straining the banking system.
On Friday, US banking regulators took control of Silicon Valley Bank after the lender failed in its attempts to raise new capital. Treasury Secretary Janet Yellen said Friday she was watching “a few banks” amid the crisis at Silicon Valley Bank.
The bank’s share price fell 68% in Friday’s premarket trading session before being halted.
Sour sentiment rippled through markets as the KBW Bank Index (^BKX) fell more than 2%, while index members including Bank of America (BAC), JPMorgan Chase (JPM ) rebounded Friday at midday. Shares of First Republic Bank (FRC) fell 51% and the stock was halted due to volatility. Other regional bank stocks were also halted, including PacWest Bancorp (PACW), Western Alliance Bancorp (WAL) and Signature Bank (SBNY).
In other unique stock moves, shares of Allbirds (BIRD) fell 46% after the shoe retailer released a disappointing quarterly earnings report that included a double-digit drop in sales and revealed an annual loss of $101 million. There is also a management shake-up as CFO Mike Bufano leaves the company.
DocuSign (DOCU) shares fell 19% after JPMorgan analysts downgraded the stock, citing disappointing demand prospects. Despite a drop in profits and revenue, chief financial officer Cynthia Gaylor has announced that she will step down this year.
Elsewhere in the cryptocurrency market, Bitcoin (BTC-USD) crashed below $20,000 on Friday amid the liquidation of Silvergate Capital (SI) and regulatory pressures on the industry.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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