U.S. Stocks Close Mostly Lower After Seeing Early Strength

After trending lower in recent sessions, stocks regained ground in morning trading on Friday but once again came under pressure over the course of the trading day. The major averages pulled back well off their early highs and into negative territory.

The major averages climbed off their worst levels going into the close but remained sharply lower. The Dow tumbled 337.98 points or 1.1 percent to 31,318.44. the Nasdaq tumbled 154.26 points or 1.3 percent to 11,630.87 and the S&P 500 clumped 42.59 points or 1.1 percent to 3,924.26.

The volatility on Wall Street came came following the release of a closely watched Labor Department report showing U.S. employment increased roughly in line with economist estimates in the month of August.

The report showed non-farm payroll employment rose by 315,000 jobs in August after surging by a revised 526,000 jobs in July.

Economists had expected employment to increase by about 300,000 jobs compared to the jump of 528,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged up to 3.7 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

The unexpected uptick by the unemployment rate came as the labor force increased by 786,000 persons, more than outpacing the 442,000-person growth in the household measure of employment.

Amid recent concerns about the outlook for interest rates, the jobs data was described as a “goldilocks” report by some economists, coming in neither too hot nor too cold.

“The August employment report paints a very positive picture regarding the current state of the US economy with solid jobs growth yet signs that supply strains are easing as workers return to the labor force,” said ING Chief International Economist James Knightley

He added, “With wage growth coming in lower than expected it points to a slower pace of rate hikes after September’s expected 75 basis point move.”

As separate report released by the Commerce Department unexpectedly showed a sharp pullback in new orders for U.S. manufactured goods in the month of July.

The Commerce Department said factory orders slumped by 1.0 percent in July after surging by a revised 1.8 percent in June.

Sector News

Pharmaceutical stocks came under pressure over the course of the session, dragging NYSE Arca Pharmaceutical Index down by 1.6 percent.

Considerable weakness also emerged among healthcare stocks, as reflected by the 1.5 percent drop by the Dow Jones U.S. Health Care Index.

Commercial real estate, transportation and banking stocks also moved to the downside, while gold and energy stocks rebounded along with the prices of the respective commodities.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index closed just below the unchanged line, while Hong Kong’s Hang Seng Index slid by 0.7 percent.

Meanwhile, the major European markets showed substantial moves to the upside on the day. While the German DAX Index soared by 3.3 percent, the French CAC 40 Index shot up by 2.2 percent and the U.K.’s FTSE 100 Index jumped 1.9 percent.

In the bond market, treasuries regained ground following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 7.2 basis points to 3.193 percent.

Looking Ahead

Following a long holiday weekend, next week’s trading may be impacted by reaction to reports on service sector activity and the U.S. trade deficit along with remarks by several Fed officials, including Chair Jerome Powell.

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