Dow drops 600 points, Nasdaq closes 3% lower as rates rise after September jobs report

Shares fell on Friday as traders gauged the September jobs report, which showed the jobless rate continued to fall and triggered a rise in interest rates.

The Dow Jones Industrial Average fell 630.15 points, or 2.1%, to 29,296.79. The S&P 500 lost 2.8% to 3,639.66. The Nasdaq Composite slid 3.8% to 10,652.41, less than 1% above its low for the year.

Friday’s losses pared gains in what started off as a big comeback week for equities. Major averages still ended the week higher, but returned most of the gains from the rally that started it. The Dow Jones rose 2% on the week, while the S&P gained 1.5%. The Nasdaq gained 0.7%.

The US economy added 263,000 jobs in September, slightly below a Dow Jones estimate of 275,000, the government said on Friday. However, the jobless rate stood at 3.5%, down from 3.7% the previous month, a sign that the employment situation continues to strengthen even as the Federal Reserve tries to slow the economy with rate hikes to stem inflation.

“While the data was roughly in line with expectations, the decline in the jobless rate is apparently what the markets are obsessed with because of what it means for the Fed,” said Peter Boockvar, chief investment officer of Bleakley Financial. “When combined with the low level of initial jobless claims, the pace of layoffs remains subdued and that, of course, motivates the Fed to continue its aggressive rate hikes.”

The drop in the unemployment rate caused rates to soar, in turn weighing on equities. The 2-year Treasury yield rose 6 basis points to 4.316%. (1 basis point equals 0.01%).

Shares of Advanced Micro Devices fell after the chipmaker warned that its third-quarter revenue would come in lower than expected. Shares of Levi Strauss slid following a reduction in the company’s guidance.

“The conclusion that many people we spoke to came to is that not only will the Fed not help the markets, but in its relentless pursuit of price stability, it will continue until something breaks. in capital markets,” said Christopher Harvey, equity analyst at Wells Fargo. Securities. “What appears to be their increasingly singular goal – price stability – will likely help catalyze dislocation.”