Technology stocks sold off again as bond yields spiked Friday, after the release of the December jobs report. Markets remain confident that the Federal Reserve will act rather quickly to lift interest rates.
The
Dow Jones Industrial Average
was essentially flat and closed down just 5 points, after the index fell 170 points Thursday. The
S&P 500
slipped 0.4%, while the technology-heavy
Nasdaq Composite
slid 1%.
The U.S. added 199,000 jobs in December, missing estimates of 422,000 and falling from November’s result of 210,000. The unemployment rate fell to 3.9%. “The drop in the unemployment rate is the last piece of data we need to see to change our base case to a rate liftoff in March (rather than June),” wrote Andrew Hollenhorst, Citigroup economist.
Any strength that markets can detect in the job market could mean the Fed will be compelled to lift interest rates sooner rather than later, with more people earning and spending money, contributing to high inflation.
That strength in the labor market is detectable in Friday’s report. “Today’s nonfarm payroll report required a good look at all the numbers and not just the headline miss,” wrote Edward Moya, senior market analyst at Oanda.
That sent the 10-year Treasury yield, which forecasts long-term inflation, up to 1.8%, before settling at 1.77%, a new pandemic-era high. The 2-year Treasury yield, the movements of which often attempt to forecast how many rate hikes are coming, rose from 0.87% to 0.9% after the report was released. It closed at 0.87%.
The rise in long-term bond yields is hurting tech stocks, which have performed poorly compared to the broader market recently. The Nasdaq is down about 7% from its all-time high, which the index hit in late November. And since that point, the S&P 500 has been essentially flat. Many fast-growing tech companies are investing heavily now to produce large profits far…
