NEW YORK, NY - FEBRUARY 02: Traders work on the floor of the New York Stock Exchange (NYSE) on February 2, 2016 in New York City. The Dow Jones industrial average fell nearly 300 points today on renewed fears over the health of the global economy and another fall in the price of oil. Spencer Platt/Getty Images/AFP == FOR NEWSPAPERS, INTERNET, TELCOS & TELEVISION USE ONLY ==
NEW YORK: Wall Street extended a sharp selloff in afternoon trading on Friday after data showing the US unemployment rate had hit an eight-year low in January revived the prospect of a Fed rate hike this year, and tech stocks sold off heavily following weak forecasts.
Nonfarm payrolls increased by 151,000 jobs last month, below the 190,000 expected by economists polled by Reuters as the boost to hiring from unseasonably mild weather faded.
Despite the expected slowdown in job growth, the unemployment rate fell to 4.9%, the lowest since February 2008, and average hourly earnings increased 0.5%, suggesting the labor market recovery remains firm.
“That ... serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table,” said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
Adding to the negative sentiment, technology stocks sold off heavily following weak forecasts from LinkedIn and Tableau Software.
Big names such as Amazon, Facebook and Microsoft were among the biggest drags on the Nasdaq and the S&P 500.
“The market right now seems to be in a spot where the ice is a little bit thin and investors seem to be punishing stocks that are falling out of favor, whether it is caused by direct earnings or guidance,” said Gordon Charlop, a managing director at Rosenblatt Securities in New York.
“LinkedIn and Tableau are names that are leaders. Those two names are important names, widely held, widely followed, and the disruption we saw in those prices affected stocks in that sector, without a doubt.”
At 1:50pm ET (1850 GMT), the Dow Jones industrial average was down 237.88 points, or 1.45%, at 16,178.7, the S&P 500 was down 35.58 points, or 1.86%, at 1,879.87.
The Nasdaq Composite index was down 138.91 points, or 3.08%, at 4,370.65, on track for its biggest one-day percentage drop in more than three weeks.
Eight of the 10 major sectors were lower, with the technology index’s 3.29% fall leading the decliners, its biggest fall in more than five months.
Stocks have had a rough start to 2016, hurt by tepid US growth, falling oil prices and concern that the world faces a China-led slowdown.
US President Barack Obama said the jobs report showed the strength of the US economy but added that there was still “anxiety and concern” about its direction.
Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.
Shortly after the jobs report, traders were pricing in one rate hike this year. Just before the report, no hikes were expected in 2016.
LinkedIn was down 42.3% at US$111.03 after plunging as much as 43%, wiping out about US$11bil of market value, a day after the company’s revenue forecast missed estimates.
Tableau Software was down 47.5% at US$42.62 after hitting an all-time low of US$40.04. Tableau’s fall dragged on other Software as a Service (SaaS) stocks. Workday, Qlik Technologies, Cornerstone OnDemand, Hortonworks and Teradata were all down by between 8% and 15%.
Declining issues outnumbered advancing ones on the NYSE by 2,216 to 763. On the Nasdaq, 2,127 issues fell and 588 advanced.
The S&P 500 index showed five new 52-week highs and 22 new lows, while the Nasdaq recorded three new highs and 154 new lows. - Reuters
Limited time offer:
Just RM5 per month.
