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The US economy added a forecast-beating 172,000 jobs in May, but there were few smiles on Wall Street where the data was seen as a signal the US Federal Reserve will raise interest rates (MARIO TAMA) \u00b7 MARIO TAMA\/GETTY IMAGES NORTH AMERICA\/Getty Images via AFP <\/p>\n
Forecast-beating US jobs data rattled Wall Street on Friday as investors saw increased chances of an interest rate hike.<\/p>\n
Oil prices retreated meanwhile despite continued clashes in Lebanon, with no apparent progress in reaching a peace deal between Iran and the United States that would open up energy exports through the Strait of Hormuz.<\/p>\n
Data showed the US economy added 172,000 jobs in May, far more than the 80,000 expected by economists polled by Dow Jones Newswires and The Wall Street Journal.<\/p>\n
April figures were also revised higher, to 179,000 from 115,000, indicating the US economy is resilient as rising energy costs from the Mideast war begin to hit consumers and businesses.<\/p>\n
While the figures are “good news for the US economy, borrowers and investors may feel differently,” said eToro analyst Bret Kenwell.<\/p>\n
In a best scenario, he said, a rapid resolution of the conflict that allows oil prices to drop would allow the US Federal Reserve to ride out the recent spike in inflation.<\/p>\n
“However, if policymakers even start talking about rate hikes or taking a more hawkish posture, that could throw cold water\u00a0on the recent stock market surge,” Kenwell said.<\/p>\n
Yields on US Treasury bonds rose in response to the data as investors anticipated higher rates from the US Federal Reserve.<\/p>\n
The dollar rose against main rivals as well.<\/p>\n
“This report adds to pressure on the Fed to drop its easing bias, but it may not trigger a rush to price in rate hikes anytime soon,” said Kathleen Brooks at XTB, noting that markets still price a less than 40 percent chance of a rate hike this year.<\/p>\n
Wall Street’s main stock indices were lower, but the Dow still gained enough in initial trading to set a record high before sagging into the red.<\/p>\n
The Nasdaq Composite fell 2.1 percent as investor jitters over AI investments returned.<\/p>\n
After pushing equity markets to record highs this year, technology firms are facing selling pressure on concerns that the eye-watering sums pumped into artificial intelligence may have been overdone and stock valuations are too high.<\/p>\n
The so-called Magnificent Seven, which includes AI players Nvidia, Google-parent Alphabet and Meta, were mostly lower.<\/p>\n
US chipmaker Broadcom also sparked concern this week after its revenue forecast for the third quarter undershot expectations.<\/p>\n
Broadcom’s shares fell 5.6\u00a0percent on Friday, and those of rival Micron Technology dropped 7.0\u00a0percent.<\/p>\n
Tech tremors also hit Asian markets.<\/p>\n
South Korea’s tech-heavy stock market tanked almost seven percent at one point Friday, before ending down 5.5 percent.<\/p>\n
The Nikkei in Tokyo was off more than one percent, matching Thursday’s retreat.<\/p>\n
The losses come as investors anticipate the coming IPO by Elon Musk’s SpaceX, which is aiming to raise $75 billion in the world’s biggest initial public offering.<\/p>\n
“Broadcom’s revenue miss sparked profit-taking across the semiconductor sector and gave investors a reason to pause after the recent AI-driven rally,” said City Index’s Fiona Cincotta.<\/p>\n
She added that “Broadcom’s results suggest investor expectations may have run ahead of fundamentals.”<\/p>\n
In Europe, both Frankfurt and Paris ended lower after official data showed a contraction in eurozone economic growth in the first quarter, which was dragged down by a sharp decline in Irish output due to accounting measures of multinationals.<\/p>\n
– Key figures at around 1530 GMT –<\/p>\n
Brent North Sea Crude: DOWN 1.1 percent at $94.00 a barrel<\/p>\n
West Texas Intermediate: DOWN 1.7 percent at $91.49 a barrel<\/p>\n
New York – DOW: DOWN 0.3 percent at 51,398.98 points<\/p>\n
New York – S&P 500: DOWN 1.2 percent 7,496.69<\/p>\n
New York – Nasdaq: DOWN 2.1 percent at 26,260.16<\/p>\n
London – FTSE 100: UP less than 0.1 percent at 10,368.05\u00a0(close)<\/p>\n
Paris – CAC 40: DOWN 0.3 percent at 8,218.24 (close)<\/p>\n
Frankfurt – DAX: DOWN 0.8 percent at 24,759.05 (close)<\/p>\n
Tokyo – Nikkei 225: DOWN 1.3 percent at 66,588.12 (close)<\/p>\n
Hong Kong – Hang Seng Index: DOWN 1.2 percent at 24,961.95 (close)<\/p>\n
Shanghai – Composite: DOWN 0.7 percent at 4,027.74 (close)<\/p>\n
Euro\/dollar: DOWN at $1.1547 from $1.1610 on Thursday<\/p>\n
Pound\/dollar: DOWN at $1.3375 from $1.3423<\/p>\n
Dollar\/yen: UP at 160.26 yen from 160.03 yen<\/p>\n
Euro\/pound: DOWN at 86.33 pence from 86.50 pence<\/p>\n
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