US stocks went up in smoke on Friday after the crucial jobs report came in hotter than expected and jitters over the stunning bankruptcy of Silicon Valley Bank (SIVB) continued to weigh on markets.
Check back in on the S&P 500 (^GSPC) around 1:00 PM. ET, the index turned red 1.5%, while the Dow Jones Industrial Average (^DJI) fell 1.2%. Contracts with the tech-intensive Nasdaq Composite (^IXIC) fell 1.8%.
Bond yields fell. The yield on the benchmark 10-year US Treasury fell to 3.71% on Friday.
Wall Street processed two major events in the financial world on Friday: the jobs report and the unfolding saga of Silicon Valley Bank, which became the largest financial institution to fail since the 2008 financial crisis.
Friday’s job pressure in February once again beat expectations as the US economy added 311,000 jobs, a slower pace than the January blowout figure, and compared to economists’ consensus estimates for job growth of 225,000. The unemployment rate rose to 3.6% and wage growth increased at an annualized rate of 4.6%, slower than expected.
“Just go to first principles. Labor markets are undeniably strong. Over the past three months, nonfarm payrolls averaged 351,000,” Neil Dutta, chief of economics at Renaissance Macro Research, wrote in a statement.
“Full-time employment has increased by an average of 442,000 a month this year. Given the rise in the participation rate and the slowdown in wage growth (mostly a compounding story) I can see why the soft landing bulls are running with today’s report, especially given the set-up goes into effect but let’s put the obvious the Fed’s job isn’t done yet Terminal rates are still going up Oh and it’s time to hit the mute button for people talking about it again, a looming recession and say no-landing story a hoax,” he added.
Notable job growth was in leisure and hospitality, retail, government and healthcare, while employment lagged in information, transportation and warehousing, the Bureau of Labor Statistics reported.
The Federal Reserve is closely monitoring the labor market on all fronts as the central bank tries to cool inflation. The February job posting continued to highlight the trend of hiring, even as other recent government data suggest the economy is picking up steam. Economists viewed the release of payrolls as a report that would show whether hiring gains were an outlier or the start of economic acceleration.
The accumulation of economic data, coupled with comments this week from Chairman Jerome Powell, has sparked debate over whether a 0.25% or 0.50% rate hike by the Fed is likely for the March meeting .
Market participants are betting that the Federal Reserve will pass a rate hike of a quarter point at its next meeting, according to the CME FedWatch tool.
However, recent events in the banking world have raised other concerns for Fed officials as their monetary tightening policies are creating tensions in the banking system.
On Friday, U.S. banking regulators took control of Silicon Valley Bank after the lender failed in its attempts to raise fresh capital. Treasury Secretary Janet Yellen said on Friday she is keeping an eye on a “few banks” during the crisis at Silicon Valley Bank.
The bank’s share price fell 68% during Friday’s premarket trading session before being halted.
Sour sentiment spread across markets as the KBW Bank index (^BKX) fell more than 2% as index members including Bank of America (BAC), JPMorgan Chase (JPM) rallied during afternoon trading on Friday. Shares of First Republic Bank (FRC) plummeted 51% and the stock was halted due to volatility. Other regional bank stocks have also been discontinued, including PacWest Bancorp, Western Alliance Bancorp and Signature Bank.
In other single-share moves, shares of Allbirds (BIRD) fell 46% after the footwear retailer released a disappointing quarterly report that showed a double-digit sales decline and revealed an annual loss of $101 million. There is also a leadership shakeup with Chief Financial Officer Mike Bufano leaving the company.
Shares of DocuSign (DOCU) fell 19% after JPMorgan analysts downgraded the stock, citing a disappointing demand outlook. Despite disappointing earnings and earnings, CFO Cynthia Gaylor announced she would be stepping down this year.
Elsewhere, in the cryptocurrency market, Bitcoin (BTC-USD) collapsed below $20,000 on Friday amid the liquidation of Silvergate Capital (SI) and regulatory pressure on the industry.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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