Wall Street fluctuates sharply amid worries about rates, the economy Associated Press

NEW YORK (AP) – Shares are falling on Friday as Wall Street ponders how to interpret a strong report on jobs in the U.S. amid fears that the Federal Reserve could trigger a recession in its bid to stem inflation.

The S&P 500 was 1% lower in the afternoon after data showed the US employers continue to hire quickly, and workers receive relatively large increases, albeit without inflation.

The market reaction reflects investors’ concerns that strong figures will keep the Fed on the path to a sharp and steady rise in interest rates amid inflation, analysts say. Sales gained momentum at the auction in the afternoon. Earlier, the market cut its losses briefly, and the S&P 500 turned into modest growth after an early surge in treasury facing profitability cooled, and economists pointed to some mixed signals about where inflation is going.

The Dow Jones industrial average fell 288 points, or 0.9%, to 32,715 as of 14:13 Eastern time after a coup between a loss of 523 points and a gain of 57. The Nasdaq composite was down 1.6% after a short-term erasure wound at 2.7%.

Earlier this week, fluctuations were even wilder as all types of markets, from bonds to cryptocurrencies, struggle with the new market order when The Federal Reserve is aggressively moving towards support jerks for an economy put in place through a pandemic.

The Fed hopes to raise rates and slow the economy enough to suppress the highest inflation in four decades, but it risks stifling growth if it goes too far or too fast. This week, the Fed raised its key short-term interest rate by half a percentage point, making it the largest such increase since 2000. It also says that this size is likely to be even larger.

Higher interest rates not only restrain the economy by making loans more expensive, they also put downward pressure on the prices of all types of investments. In addition to interest rates and inflation, war in Ukraine and continued Pandemic coronavirus covid-19 infection also weigh in the markets.

However, shares rose on Wednesday afternoon, after being contained in comments by Federal Reserve Chairman Jerome Powell after the latest rate hike. He said the Fed was not “actively considering” an even bigger jump of 0.75 percentage points at its next meeting, which markets had previously viewed as almost a certainty.

The score became an instant market response, and the S&P 500 rose 3% on its best day in almost two years. However, the next day it sobered up amid the recognition that the Fed still intends to aggressively raise rates in the fight against inflation. The S&P 500 on Thursday lost all its gains over the previous day, as well as slightly more, on one of the worst days since the collapse in early 2020 caused by the coronavirus pandemic.

Perhaps that’s why stocks faltered early on Friday, after data showed hiring was still strong and pressure on the company was still high to boost workers ’wages.

“These data do not change the outlook for Fed policy; the trajectory of rates in the near future remains upward, “- wrote in a note Rubila Farooki, chief economist of the United States High Frequency Economics.

Many of the factors contributing to rising inflation may persist into 2022, said Samir Samana, senior global market strategist at the Wells Fargo Investment Institute. Recent market fluctuations could mean that investors are approaching a better adaptation to the Fed’s aggressive policy change, Samana said.

“The Powell Conference did not change anything; inflation is still high, ”he said. “You’ve probably reached a point where the Fed at least won’t be such a market driver.”

The profitability of the Treasury also changed dramatically after the publication of the Jobs Report.

The yield on the two-year Treasury, which is moving in line with expectations regarding Fed policy, initially rose to 2.77% earlier this morning. But then it fell to 2.67%, from 2.71% at the end of Thursday.

Yields on 10-year Treasury bills jumped to 3.13% shortly after the data was released and then fell to 3.12%. This is still close to the highest level since 2018 and has more than doubled compared to 2022, only 1.51%.

The unrest came at a time when economists were pointing to some possible signs of a peak in the labor market, which could be an early signal that inflation will be moderate. This could ultimately mean less pressure on the Federal Reserve to raise rates so much.

While workers’ wages in April were 5.5% higher than a year earlier, economists expected, average hourly wage growth since March was slightly lower than forecast. Slower wage increases are reluctant for workers, but investors see this as less pressure on inflation.

BlackRock’s chief investment officer for global fixed income Rick Reeder pointed to surveys showing that companies ’ability to hire is getting easier, and other signs that the hot labor market may be growing weak.

“This raises the question of whether the Fed may slow down the tightening process at some point in the coming months as a result of these expected trends, but while this is possible, recent data will not give markets much comfort that it will happen any time soon.” Reader. the report said.

At the moment, expectations of rising interest rates, in particular, are hitting stocks with high growth rates.

This is largely due to the fact that many of them are considered the most expensive in the coming years leading the market. Many technology-focused stocks have been some of the biggest market losers this year, including Netflix, Nvidia and parent company Facebook Meta Platforms.

Nearly half of Nasdaq shares have recently fallen at least 50% from their 52-week highs, according to a BofA Global Research report by chief investment strategist Michael Hartnett.

AP Business Writers Joe MacDonald and Damian J. Trois contributed. Veiga reports from Los Angeles.