Stocks Drop for a 2nd Day After Stunning Jobs Report

Stocks slipped again on Wall Street Monday. The S&P 500 fell 0.6%, its second straight fall after a stunningly strong report on the jobs market dented the market’s hopes that interest rates would ease. The S&P 500 fell 25.40 points to 4,111.08. The Dow Jones Industrial Average fell 34.99 points, or 0.1%, to 33,891.02. The Nasdaq composite fell 119.50 points, or 1%, to 11,887.45. The sharpest action was again in the bond market, where expectations are rising for the Federal Reserve to stay firm on keeping interest rates higher for longer to combat inflation, the AP reports. It’s something the Fed has been talking about for a long time, but also something the market has been stubborn about not believing fully.

The yield on the two-year Treasury, which tends to track expectations for the Fed, leaped. It zoomed to 4.45% from 4.29% late Friday and just 4.10% the day before. That’s a significant move for the bond market. The 10-year yield, which helps set rates for mortgages and other important loans, jumped to 3.63% from 3.52% late Friday. Friday’s jolting jobs report showed that US employers added a third of a million more jobs than expected last month despite higher rates. Normally, such strength would be good news for markets. At the least, it should mean higher sales for many companies. But it also raised worries a too-strong labor market will keep inflationary pressures alive and force the Fed to keep rates higher for longer.

The earnings reporting season is at its halfway point, with roughly half the companies in the S&P 500 having reported, and they’re on track for a roughly 5% drop from year-earlier levels, according to FactSet. That would be the first such drop since the summer of 2020, when the pandemic was ravaging the global economy. Tyson Foods fell 4.6% after it reported weaker profit and revenue for its latest quarter than analysts expected. Dell Technologies dropped 3% after it said it will cut about 5% of its workforce. The company's vice chairman said in a message to employees that “market conditions continue to erode with an uncertain future.”

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