By Anora Mahmudova and Victor Reklaitis, MarketWatch

Economy creates 173,000 jobs in August; unemployment at 5.1%

Selling on Wall Street accelerated on Friday after the monthly jobs report for August was viewed as solid enough for the Federal Reserve to consider an interest-rate hike in September.

Friday's losses added to declines earlier in the week, putting the main indexes on track to record weekly losses of more than 3%

The S&P 500 slid 30 points, or 1.4% to 1,922, on Friday, with losses across the board.

The Dow Jones Industrial Average dropped 256 points, or 1.6%, to 16,118 with all 30 components trading lower.

The Nasdaq Composite slumped 40 points, or 0.9% to 4,683.

Read:'Bearish divergence' is warning investors not to buy the dip in the stock market (http://www.marketwatch.com/story/bearish-divergence-is-warning-investors-not-to-buy-the-dip-in-the-stock-market-2015-09-04)

Widely seen as the last notable economic report before the Federal Reserve decides whether to raise interest rates at its two-day meeting on Sept. 16-17, the jobs data (http://www.marketwatch.com/story/us-adds-173000-jobs-in-august-as-unemployment-falls-to-seven-year-low-2015-09-04)showed the U.S. economy added 173,000 non-farm jobs last month while the unemployment rate dropped to 5.1%.

"The Fed has been clear about wanting to raise rates this year and at least now they have a green light if they decide to do so," said Kate Warne, investment strategist at Edward Jones.

See:Panel of ex-Fed officials say no rate hike in September (http://www.marketwatch.com/story/panel-of-ex-fed-officials-say-no-rate-hike-will-come-at-september-meeting-2015-09-03)

While the headline number of 173,000 was less than the consensus estimate, gains for July and June were revised upward by a combined 44,000. The unemployment rate fell to 5.1% from 5.3%, marking the lowest level since April 2008 just as the Great Recession was setting roots.

MarketWatch's Rex Nutting, for one, says the data are telling the Fed to raise interest rates (http://www.marketwatch.com/story/the-economic-data-tell-the-fed-to-raise-rates-now-2015-09-04).

Read Tim Mullaney's view to the contrary (http://www.marketwatch.com/story/4-reasons-we-know-were-not-ready-for-the-fed-to-raise-rates-2015-09-04).

Liz Ann Sonders said once the Fed begins increasing interest rates, it will be a positive factor for the stock market as well as for businesses.

"Zero percent interest rates has led to deflationary mindset of company executives. Corporations borrowed money at very low rates to buy back their own shares instead of increasing capital spending. We believe raising rates would change that dynamic," Sonders said.

However, Sonders warned that the correction in the market, which she claims was overdue, still has some ways to go before finding a bottom. A correction is generally defined as a drop of 10% or more from a notable high. All three benchmarks had hit that mark last month but have since recovered some of the losses.

"There will not be a V-shaped recovery, as valuations are still high and are likely to come down before we see improving earnings expectations," she said.

Movers and shakers: Shares of Freeport-McMoRan(FCX) skilled 7% after the S&P revised the miner's outlook to negative, citing lower copper prices would increase the company's debt leverage.

Netflix Inc.(NFLX) fell 2.9% , putting the streaming-video company on track for its sixth down session in a row. The slump has come as investors fret about increasing competition (http://www.marketwatch.com/story/netflixs-stock-drops-again-heads-toward-a-fifth-straight-loss-2015-09-03).

Shares in Joy Global Inc.(JOY) rose 3.6%, recouping some of the 15% decline on Thursday, when the company announced earnings that missed expectations.

Chinese e-commerce giant Alibaba Group Holding Ltd.(BABA) fell 2.2% following news that its founders plan to borrow $2 billion against their shares (http://www.marketwatch.com/story/alibaba-founders-to-borrow-2-billion-against-company-shares-reports-2015-09-04) in the company.

Other markets: Japan's Nikkei slumped and notched its biggest weekly drop since April 2014 (http://www.marketwatch.com/story/nikkei-falls-to-its-lowest-level-since-february-2015-09-04), while trading in China was closed for a national holiday.

European stocks (http://www.marketwatch.com/story/european-stocks-set-for-weekly-loss-with-key-us-jobs-report-ahead-2015-09-04) skidded, and crude-oil prices (http://www.marketwatch.com/story/oil-prices-fall-as-investors-wait-for-key-us-jobs-report-2015-09-04) retreated. The dollar (http://www.marketwatch.com/story/dollar-weakens-ahead-of-august-jobs-report-2015-09-04) was steady while gold pulled back.

Trading in U.S. markets will be closed Monday for the Labor Day holiday. Check out: When do markets close for Labor Day (http://www.marketwatch.com/story/when-do-markets-close-for-labor-day-2015-09-03)

You're invited

Rate Quake: How to manage retirement investments in a rising-interest-rate environment

If you'll be in New York on Sept. 16, you're invited to join us for an evening of cocktails and conversation to discuss what interest-rate hikes mean for those saving and investing for retirement. As the Federal Reserve prepares to raise short-term rates, advisers and their clients need a clear sense of direction in the face of this sea change. Our panelists will discuss managing debt, portfolio protection and bond duration.

Our moderator is Andrea Coombes, award-winning personal-finance writer and editor. She'll be joined by Michael Falk, a partner with the Focus Consulting Group; Joseph M. Jennings, Jr., wealth director and senior vice president at PNC Wealth Management; and Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.

The event is free and open to the public, but space is limited and reservations are required. For more information or to RSVP for this event, please email MarketWatchEvent@wsj.com (mailto:MarketWatchEvent@wsj.com).

 

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(END) Dow Jones Newswires

September 04, 2015 12:23 ET (16:23 GMT)

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