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Stocks fall as war overshadows ‘fantastic’ US jobs data

NEW YORK (AP) — Stocks around the world tumble on Friday as not even a gangbuster report on the U.S. labor market can distract Wall Street from its concerns about the war in Ukraine.

The S&P 500 was down 1.7% in morning trade, on higher losses in Europe after a fire at the continent’s largest nuclear power plant caused by bombings raised concerns over the aftermath. . Markets around the world have swung sharply over the past week on concerns about the price swings for oil, wheat and other commodities produced in the region due to the Russian invasion, which which exacerbated the already high inflation in the world.

Treasury yields fell again as investors shifted money into US government bonds in search of safety, and some jitters on Wall Street grew.

All the moves came despite a much stronger-than-expected US jobs report by economists, described as encouraging and even “fantastic”. Hirings by employers last month exceeded expectations by hundreds of thousands of workers, more people returned to the labor market after sitting on the sidelines and employment figures for previous months were revised on the rise.

On the inflation front, worker wage growth was slower last month than economists expected. While this is daunting for workers hoping to keep up with rising grocery prices, for economists and investors it means less risk of the economy heading into what is known as a “wage-wage spiral”. price”. In such a strengthening cycle, higher wages for workers would induce firms to raise their own prices even further.

“The COVID recovery was in full swing in the jobs report,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

“The tricky part is the future, not the past,” he said, as crude oil prices rallied above $112 a barrel amid concerns about pressure on oil supplies. because of the Ukrainian war. “Higher fuel and food costs can eat into consumers’ budgets. These high costs can be a boon for oil producers and farmers, but not for everyone. »

Those concerns helped push the Dow Jones Industrial Average down 519 points, or 1.5%, to 33,275 as of 11:05 a.m. EST. The Nasdaq composite was 2.1% lower.

The losses were widespread, with more than 80% of S&P 500 stocks down. Among the few winners were Chevron, Exxon Mobil and other companies that can benefit from higher oil prices. The S&P 500 is on course for its third weekly loss in the past four, and it’s down just over 10% from its all-time high set earlier this year.

In Europe, whose economy is much more closely tied to the conflict due to its dependence on the region’s oil and natural gas, the losses were greater. The French CAC 40 fell 4.2% on Friday, the German DAX lost 3.8% and the FTSE 100 in London fell 2.7%.

Russian forces gained ground, bombing Europe’s largest nuclear power plant and setting a fire early on Friday as they continued their attack on a crucial Ukrainian energy-producing city. But authorities said the fire was safely extinguished. US Energy Secretary Jennifer Granholm tweeted that the reactors at the Zaporizhzhia plant were protected by strong containment structures and were shut down safely.

Trading on the Moscow Stock Exchange, after briefly opening on Monday, remained closed throughout the week. The value of the Russian ruble continues to hover below one penny after plunging about 30% since the middle of last week. It now takes about 104 rubles to get a dollar, compared to less than 75 at the start of the year. The ruble fell as Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.

The price of US oil rose 3.9% to $111.89 a barrel. Brent, the international standard, climbed 4% to $114.93 a barrel.

Amid the rush to safety, the 10-year Treasury yield fell to 1.70% from 1.84% on Thursday night, a big step. It is well below the 2% level it reached last month as expectations of upcoming interest rate hikes by the Federal Reserve to curb inflation were set.

Stocks rallied mid-week after Federal Reserve Chairman Jerome Powell said he favored a more modest increase in interest rates later this month than some investors did. had feared. The Fed is set to hike rates for the first time since 2018, though it has a tightrope walk ahead of it as rates that are too high can choke the economy and trigger a recession.

Powell warned on Thursday that the fighting in Ukraine is likely to further amplify the high inflation that is troubling global economies. Russia is a major oil producer and prices have risen as global supplies are threatened by the conflict.

“For a world that was already struggling with worrying (cost-push) inflation before the invasion of Ukraine, soaring commodity prices due to geopolitical fallout are not just an inconvenience, but rather a threat. constraining economy,” Mizuho Bank said in a comment.


AP Business Writer Elaine Kurtenbach contributed.

Tags : federal reserveinterest rateswall street
Margarita W. Wilson

The author Margarita W. Wilson