# Stocks fall as strong U.S. payrolls muddies rate bets
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-02
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Investors cautious as U.S. jobs report boosts Treasury
Meta Description: Equities fall as investors anticipate hawkish Fed response to strong U.S. jobs report. Employers hire more workers, boost wages despite recession fears.
URL: https://financedigest.com/stocks-fall-as-strong-u-s-payrolls-muddies-rate-betshtml

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By Sinéad Carew

NEW YORK (Reuters) – Equities took a dip on Friday while U.S. [Treasury yields](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") climbed as investors bet on a more hawkish-than-expected Federal Reserve response to a strong U.S. jobs report with employers hiring more workers than [expected in November and raising wages despite recession](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") worries.

The U.S. Labor Department reported that nonfarm [payrolls increased by 263,000 jobs last month compared with economist expectations](https://www.financedigest.com/instant-view-us-may-payrolls-rise-up-than-expected.html "Instant View: US May payrolls rise up than expected") for 200,000 jobs. And [average hourly earnings increases](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") 0.6% up from 0.5% in October.

The report, which came two days after Fed Chair Jerome Powell said it could be time to slow the pace of [rate hikes](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike"), made investors question whether the central banker would be able to follow through on his suggestion.

“The better-than-expected [jobs report](https://www.financedigest.com/global-shares-fall-on-pandemic-fears-ahead-of-jobs-report.html "Global shares fall on pandemic fears ahead of jobs report") is good news for the American worker, and bad news, at least short-term, for risk assets as it supports a hawkish monetary policy by the U.S. Federal Reserve,” Tim Holland, chief [investment officer at Orion Advisor](https://www.financedigest.com/5-tips-choosing-right-investment-advisor.html "5 tips for choosing the right investment advisor") Solutions in Omaha, Nebraska.

“That said, it is [worth noting that the jobs report](https://www.financedigest.com/industrial-hearables-market-worth-us-991-5-mn-by-2026-comprehensive-research-report-by-fmi.html "Industrial Hearables Market worth US$ 991.5 Mn by 2026- Comprehensive Research Report by FMI") is backward looking, and that continuing jobless claims have been climbing. There is a good chance the labor market will slow meaningfully in the first half of 2023, forcing the [Fed to consider a much more benign policy](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") stance sooner than many expect.”

After the report traders were betting that the [Fed seen raising its policy rate](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") from the 3.75%-4% range to 4.92% by March 2023 and to the 5%-5.25% range by May, based on futures contract prices and the CME Fedwatch tool. Before the report, the rate was [seen topping](https://www.financedigest.com/sydney-covid-19-cases-seen-topping-2000-a-day-as-australia-ramps-up-vaccinations.html "Sydney COVID-19 cases seen topping 2,000 a day as Australia ramps up vaccinations") out at 4.75%-5%.

The Dow Jones [Industrial Average fell 119.52 points](https://www.financedigest.com/gas-price-surge-pushes-europes-ceramics-industry-to-breaking-point.html "Gas price surge pushes Europe’s ceramics industry to breaking point"), or 0.35%, to 34,275.49, the S&P 500 lost 26.71 points, or 0.66%, to 4,049.86 and the Nasdaq Composite dropped 105.30 points, or 0.92%, to 11,377.15.

For the [week the S&P and Nasdaq were on track](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010") for their second gain in a row while the Dow was indicating a slight decline.

The pan-European STOXX 600 index lost 0.15% and MSCI’s gauge of [stocks across the globe shed](https://www.financedigest.com/stocks-shed-gains-treasury-yields-jump-as-fed-signals-rate-hikes-could-come-soon.html "Stocks shed gains, Treasury yields jump as Fed signals rate hikes could come ‘soon’") 0.52%.

While the [dollar since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") lost ground gradually, it had jumped sharply after the jobs data was released.

The [dollar index](https://www.financedigest.com/dollar-index-jumps-after-u-s-retail-sales-show-surprise-rebound.html "Dollar index jumps after U.S. retail sales show surprise rebound") fell 0.01%, with the euro up 0.05% to $1.0527.

The [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") strengthened 0.43% versus the greenback at 134.74 per dollar, while Sterling was last trading at $1.2275, up 0.18% on the day.

In treasuries, investors also viewed signs of a resilient labor [market and rising wages as a worrisome sticky point for the Fed’s](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") efforts to tame high inflation.

Benchmark 10-year notes were up 2.7 [basis points](https://www.financedigest.com/fed-officials-still-leaning-to-75-basis-point-rate-hike-in-july.html "Fed officials still leaning to 75-basis-point rate hike in July") to 3.554%, from 3.527% late on Thursday. The 30-year [bond was last down 3.9 basis points to yield](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") 3.594%, from 3.633%. The 2-year note was last was up 7.1 [basis points to yield](https://www.financedigest.com/traders-ramp-up-bets-on-75-basis-point-ecb-sept-hike-bond-yields-jump.html "Traders ramp up bets on 75 basis-point ECB Sept hike, bond yields jump") 4.3255%, from 4.254%.

[Oil futures sank in Friday’s choppy session ahead of a meeting of the Organization of the Petroleum Exporting](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") Countries and its allies (OPEC+) on Sunday and an EU ban on Russian crude on Monday.

U.S. crude fell 1.1% to $80.31 per barrel and Brent was at $85.77, down 1.3% on the day.

Gold prices slipped, also reacting to the implications for interest rates from the [robust jobs data](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data").

Spot gold dropped 0.4% to $1,795.51 an ounce. U.S. gold futures fell 0.28% to $1,796.00 an ounce.

(Reporting by Sinéad Carew and Gertrude Chavez-Dreyfuss in New York, Ankika Biswas in Bengaluru, Nell Mackenzie in London, additional reporting by Stella Qiu; Editing by Kenneth Maxwell, Toby Chopra and Alexander Smith and Marguerita Choy)


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