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US Stocks Plunge Midday After Nonfarm Payrolls Beat Expectations; Crude Oil Jumps

10/07/2022 | 01:49pm
(MT Newswires) -- US stocks retreated as the odds of a fourth 75-basis-point increase in interest rates rose after nonfarm payrolls grew more than forecast in September.

The Dow Jones Industrial Average slid 1.9% to 29,350.6, while the S&P 500 declined 2.6% to 3,649.2. The Nasdaq Composite was 3.5% lower at 10,684.8.

Technology, consumer discretionary, and communication services led the decliners, with all but one sector, energy, in the red after midday on Friday.

The probability of a 75-basis-point increase in the Federal Reserve's policy rate next month reached 82% on Friday from 75% the previous day, according to the CME Group's FedWatch Tool. The remaining probability is for an increase of 50 basis points.

In economic news, nonfarm payrolls climbed 263,000, above the consensus estimate for an addition of 250,000 jobs. The service sector added 244,000 jobs, driven by gains in education and health services and leisure and hospitality.

The unemployment rate fell to 3.5% in September from 3.7% in August, compared with calls for the rate to remain unchanged. The labor force participation rate slipped 0.1 percentage point to 62.3%.

"We don't think today's report moves the needle on the Fed," Jefferies economists Thomas Simons and Aneta Markowska said in a note. "Nothing here provides a justification for slowing from the recent pace of 75-basis-point rate hikes, so we expect another one at the November meeting."

The 10-year yield advanced 4.1 basis points to 3.87%, and the two-year rate jumped 5.2 basis points to 4.3%.

West Texas Intermediate futures surged 4.6% to $92.53 a barrel.

Reps. Sean Casten of Illinois, Tom Malinowski of New Jersey and Pennsylvania's Susan Wild, all Democrats, introduced a bill that would mandate the removal of US troops and missile defense systems from Saudi Arabia and the United Arab Emirates. The move comes on the heels of a recent decision by OPEC+ to cut daily crude oil production by 2 million barrels a day despite calls from President Joe Biden to not reduce production at a time inflationary pressures are mounting globally.

In company news, Advanced Micro Devices (AMD) said it likely generated around $5.6 billion in revenue during its fiscal Q3 ended Sept. 30, up 29% over year-ago levels but lagging its prior forecast expecting between $6.5 billion to $6.9 million in Q3 revenue. Shares slumped 11% intraday, the steepest decliner on the S&P 500 and Nasdaq.

Stifel raised DexCom's (DXCM) price target to $120 from $112, while maintaining its buy rating. Piper Sandler also adjusted the company's share-price objective to $120 from $110, while reiterating its overweight rating. Shares of DexCom jumped 7.8% intraday, the biggest gainer on the S&P 500.

Gold was down 0.7% to $1,709.20 per troy ounce, and silver was down 1.9% to $20.27 per ounce.

MT Newswires 2022
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