Disappointing Jobs Data Leads To Early Weakness On Wall Street - U.S. Commentary

(RTTNews) - After ending the previous session roughly flat, stocks moved sharply lower at the start of trading on Friday. The major averages have not seen much further downside since then but remain firmly in negative territory.

Currently, the major averages are off their lows for the young session but stuck in the red. The Dow is down 181.39 points or 1.1 percent at 16,090.62, the Nasdaq is down 45.06 points or 1 percent at 4,582.02 and the S&P 500 is down 20.61 points or 1.1 percent at 1,903.21.

The initial weakness on Wall Street came following the release of a report from the Labor Department showing much weaker than expected job growth in the month of September.

The report said non-farm payroll employment rose by 142,000 jobs in September, well below economist estimates for an increase of about 203,000 jobs.

Job growth in July and August was also downwardly revised to 223,000 and 136,000, respectively, reflecting a net downward revision of 59,000 jobs.

Meanwhile, the Labor Department said the unemployment rate held at a seven-year low of 5.1 percent in September, matching economist estimates.

The disappointing data has added to recent concerns about the impact that overseas weakness is having on the U.S. economy.

At the same time, the much weaker than expected job growth is likely to shore up expectations that the Federal Reserve will hold off on raising interest rates later this month.

Rob Carnell, chief international economist at ING, said, "For once, these labor market numbers gave an unambiguous result. The problem is that it was unambiguously negative."

"No rate hike this month then it seems," he added. "But it raises doubts too about the probability of a December hike, unless the Fed changes the basis upon which it decided policy rates."

Reflecting the renewed economic concerns, financial stocks have shown a substantial move to the downside on the day.

The Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index have plunged by 3.8 percent and 3.9 percent, respectively, falling to multi-month lows.

Considerable weakness has also emerged among airline stocks, as reflected by the 2.2 percent loss being posted by the NYSE Arca Airline Index.

Housing, retail, and internet stocks have also come under pressure in early trading, while gold stocks are bucking the downtrend amid a notable increase by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Hong Kong's Hang Seng Index surged up by 3.2 percent, while Australia's All Ordinaries Index slumped by 1.1 percent. Japan's Nikkei 225 Index closed nearly flat.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.5 percent.

In the bond market, treasuries have spiked higher in reaction to the disappointing jobs report. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.5 basis points at 1.927 percent.