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U.S. Stocks Close Firmly In The Red As Early Buying Interest Evaporates

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March 08 2024 4:27PM

Stocks moved mostly higher in early trading on Friday but showed a notable downturn over the course of the session. The major averages pulled back well off their early highs, with the tech-heavy Nasdaq (NASDAQI:COMP) showing a particularly steep drop.

The major averages staged a failed recovery attempt in the latter part of the session, ending the day firmly in the red. The Nasdaq tumbled 188.26 points or 1.2 percent to 16,085.11, the S&P 500 (SPI:SP500) slid 33.67 points or 0.7 percent to 5,123.69 and the Dow (DOWI:DJI) dipped 68.66 points or 0.2 percent to 38,722.69.

With the downturn on the day, the major averages all moved lower for the week. The Nasdaq slumped by 1.2 percent, the Dow fell by 0.9 percent and the S&P 500 slipped by 0.3 percent.

The early strength on Wall Street came as the Labor Department’s closely watched monthly jobs report added to optimism about the outlook for interest rates.

While job growth in February came in much stronger than expected, the report also showed notable downward revisions to job growth in the two previous months.

The Labor Department said non-farm payroll employment surged by 275,000 jobs in February, while economists had expected employment to jump by 200,000 jobs.

However, the report also said job growth in December and January was downwardly revised to 290,000 and 229,000 jobs, respectively, reflecting a net downward revision of 167,000 jobs.

The Labor Department also said the unemployment rate rose to 3.9 percent in February from 3.7 percent in January. Economists had expected the unemployment rate to come in unchanged.

The downward revisions and the unexpected increase in the unemployment rate combined with a slowdown in the annual rate of wage growth has added to optimism the Federal Reserve will begin lowering interest rates in June.

Buying interest remained somewhat subdued, however, as traders seemed reluctant to continue buying stocks ahead of the release of key inflation data next week that could have a more profound impact on the outlook for rates.

The subsequent downturn by the markets partly reflected profit taking, with the Nasdaq and S&P 500 coming under pressure after reaching new record intraday highs.

AI darling Nvidia (NASDAQ:NVDA) showed a significant downturn on the day, plunging by 5.6 percent after surging by 5.1 percent to a record high in early trading.

Sector News

Semiconductor stocks helped lead the downturn on the day after helping to lead the markets higher on Thursday, with the Philadelphia Semiconductor Index plummeting by 4.0 percent.

Considerable weakness also emerged among retail stocks, as reflected by the 1.2 percent loss posted by the Dow Jones U.S. Retail Index.

Airline, computer hardware and networking stocks also came under pressure as the day has progressed, while strength remained visible among commercial real estate stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index rose by 0.2 percent, while China’s Shanghai Composite climbed by 0.6 percent and South Korea’s Kospi jumped by 1.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index edged up by 0.2 percent, the German DAX Index dipped by 0.2 and the U.K.’s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries turned in a lackluster performance for much of the session before closing roughly flat. The yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.089 percent.

Looking Ahead

While the consumer and producer price inflation data is likely to be in the spotlight next week, traders are also likely to keep an eye on reports on retail sales, industrial production and consumer sentiment.