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Wall Street falls as jobs data suggests Fed hikes not over

by The Associated Press | August 6, 2022 at 4:00 a.m.
FILE - The New York Stock Exchange on Wednesday, June 29, 2022, in New York. Stocks are opening lower on Wall Street Friday, Aug. 5, following much stronger than expected hiring data from the Labor Department.(AP Photo/Julia Nikhinson, File)

NEW YORK (AP) -- Stock indexes closed mostly lower Friday after a roller-coaster day following a blockbuster report on the U.S. jobs market that offered both good and bad news for Wall Street.

The benchmark S&P 500 ended just 0.2 percent lower after recovering from an early slide as investors reacted to the report, which showed U.S. employers unexpectedly added hundreds of thousands more jobs than forecast last month.

The blistering data suggests the economy may not be in a recession, as feared. But it also undercuts investors' speculation that a slowing economy may mean a peak for inflation soon. That means the Federal Reserve may not let up on its aggressive rate hikes to combat inflation as early as hoped. And much of Wall Street still revolves around expectations for rates.

"It's a reminder for investors on how uncertain Fed policy is going forward and the strong jobs market data shows just how far the Fed has to go," said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Stocks of technology and other high-growth companies once again took the brunt of the selling amid the rising-rate worries. The tech-heavy Nasdaq composite cut its early losses and closed down 63.03 points, or 0.5 percent, at 12,657.55.

The good news on the jobs market helped to limit losses for the Dow Jones Industrial Average, whose stocks tend to move more with expectations for the overall economy. It added 76.65 points, or 0.2 percent, to close at 32,803.47.

The S&P 500 slipped 6.75 points to end at 4,145.19. Both the S&P 500 and Nasdaq posted a gain for the week.

Beyond the nation's strong hiring, wage growth for workers also unexpectedly accelerated last month. That's helpful for households trying to keep up with the fastest price gains in 40 years. But it also raises worries on Wall Street that inflation will become more embedded in the economy.

Higher wages can cause companies to raise prices for their own products to sustain profits, which can lead to something economists call a "wage-price spiral."

To be sure, some market watchers also pointed to numbers within Friday's employment report suggesting the jobs market may not be as strong as the overall numbers imply. The number of people with multiple jobs rose by more than half a million, for example, said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

"That was mostly from people who already have a full-time job and then the second job is part-time," he said. "Maybe this is more superficially impressive than substantively impressive."

On Friday, Warner Bros. Discovery fell 16.5 percent for the biggest loss in the S&P 500 after reporting weaker results for the latest quarter than analysts expected. Monster Beverage lost 5.2 percent after it reported weaker profit than expected, though its revenue was stronger than forecast.

photo A currency trader talks with her colleague at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 5, 2022. Asian stock markets rose Friday ahead of U.S. job market data that might influence Federal Reserve decisions about further interest rate hikes. (AP Photo/Ahn Young-joon)
photo A currency trader watches monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), left, and the exchange rate of South Korean won against the U.S. dollar at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 5, 2022. Asian stock markets rose Friday ahead of U.S. job market data that might influence Federal Reserve decisions about further interest rate hikes. (AP Photo/Ahn Young-joon)
photo Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 5, 2022. Asian stock markets rose Friday ahead of U.S. job market data that might influence Federal Reserve decisions about further interest rate hikes. (AP Photo/Ahn Young-joon)
photo A currency trader watches screens showing the foreign exchange rates at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 5, 2022. Asian stock markets rose Friday ahead of U.S. job market data that might influence Federal Reserve decisions about further interest rate hikes. (AP Photo/Ahn Young-joon)
photo A detail of the exterior of The New York Stock Exchange, on Wednesday, Aug. 3, 2022, in New York. Stocks are opening nearly flat on Wall Street Thursday, Aug. 4. New data from the Labor Department showed more Americans applied for jobless benefits last week as the number of unemployed continues to rise modestly.(AP Photo/Julia Nikhinson)

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