Stocks dip as worries about banks overshadow jobs report
By Joe Mcdonald And Matt Ott, The Associated Press on March 10, 2023.
NEW YORK (AP) – Stocks are opening modestly lower as more weakness in banks overshadowed potentially encouraging news in the government’s monthly jobs report. Banks were broadly lower a day after a wipeout in SVB Financial, a Silicon Valley bank that caters to startup companies, triggered fears of broader troubles in the banking sector. Big Tech companies were also lower. The S&P 500 was down 0.6% in the early going Friday, a day after tumbling to one of its worst drops of the year. The Dow and the Nasdaq also fell. All three are headed for sizable weekly losses. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. Wall Street futures reversed course Friday after the government reported another healthy month of hiring in February. Futures for the Dow Jones Industrial Average edged up 0.1% and futures for the S&P 500 rose 0.3%. Both were down before the report was released. Oil prices also rebounded. The Labor Department reported Friday that America’s employers added a substantial 311,000 jobs in February, fewer than January’s huge gain but enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation. The unemployment rate rose to 3.6% from a 53-year low of 3.4%, as more Americans began searching for work and not all of them found jobs. On Thursday, the S&P 500 index fell by its biggest one-day margin this year after Federal Reserve Chair Jerome Powell warned rates might be raised faster than expected to cool stubbornly high inflation. Adding to the rout was SVB Financial Group, which lost 60% of its value Thursday after announcing plans to raise up to $1.75 billion to strengthen its financial position amid concerns about higher interest rates and the economy. The SVB news dragged Bank of America, Citigroup and others along with it, though they had stabilized by premarket Friday. Trading in SVB was halted Friday before the bell after shares continued to slide another 60% in off-hours trading. Traders looked ahead to U.S. government hiring data due out Friday after other indicators showed the job market has stayed strong despite repeated interest rate hikes. That is good for workers, but Fed officials worry rising wages might fuel inflation. That might lead to more rate hikes to dampen business activity and hiring. Fed officials are “clearly messaging that rates will move higher,” Rubeela Farooqi of High Frequency Economics said in a report. Powell said earlier in the week the Fed was ready to impose more big rate hikes if necessary. That added to fears the Fed and other central banks might push the global economy into at least a brief recession to extinguish inflation. Yields on the two-year Treasury, which tends to track expectations for future Fed action, fell further to 4.74% early Friday 4.87% Thrusday. It hit 5.07% earlier in the week, hovering at its highest level in 16 years. Traders expect the Fed to raise its benchmark lending rate by an unusually large margin of 0.5 percentage points at its March 22 meeting. That is up from an expectation of 0.25 points before Powell’s comments this week, according to CME Group. U.S. inflation edged up to 5.4% in January, well above the Fed target of 2%. The central bank has already raised its key rate to a range of 4.50% to 4.75%, up from close to zero at the start of 2022, its fastest set of hikes in decades. Companies have been cautious about their prospects in 2023. Economists expect profits to fall through the first half of the year. In European trading, the FTSE 100 in London fell 1.7% at midday, Frankfurt’s DAX tumbled 1.3% and he CAC 40 in Paris fell 1.1%. In Asia, the Shanghai Composite Index fell 1.4% to 3,230.07 and the Nikkei 225 in Tokyo tumbled 1.7% to 28,143.97. The Hang Seng in Hong Kong slid 3% to 19,319.92. The Kospi in Seoul gave up 1% to 2,394.59 and Sydney’s S&P-ASX 200 lost 2.3% to 7,144.70. India’s Sensex declined 1.2% to 59,085.70. New Zealand and Southeast Asian markets declined. In energy markets, benchmark U.S. crude picked up 39 cents to $76.11 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 94 cents the previous session to $75.72. Brent crude, the price basis for international oil trading, rose 45 cents to $82.04 per barrel in London. It sank $1.07 the previous session to $81.59. The dollar gained to 136.70 yen from Thursday’s 136.17 yen. The euro rose to $1.0588 from $1.0578. On Thursday, the S&P 500 fell 1.9%, further eroding this year’s gains. Some 95% of companies in the benchmark index declined. The Dow lost 1.7% and the Nasdaq composite sank 2.1%. – – McDonald reported from Beijing; Ott reported from Silver Spring, Maryland. 27-26
