Stocks Come Under Pressure Following Monthly Jobs Data - U.S. Commentary

(RTTNews) - On the heels of the release of the closely watched monthly jobs report, stocks have moved mostly lower in early trading on Friday. The major averages have slid firmly into the red after ending yesterday's choppy trading in positive territory.

In recent trading, the major averages have climbed off their worst levels, but they continue to post notable losses. The Dow is down 12.38 points or 0.8 percent at 16,294.20, the Nasdaq is down 76.80 points or 1.7 percent at 4,432.76 and the S&P 500 is down 20.56 points or 1.1 percent at 1,894.89.

The weakness on Wall Street comes following the release of a Labor Department showing disappointing job growth in January but also a drop in the unemployment rate to a nearly eight-year low.

The Labor Department said non-farm payroll employment climbed by 151,000 jobs in January compared to economist estimates for an increase of about 188,000 jobs.

While the report also said the jump in employment in December was downwardly revised to 262,000 jobs from 292,000 jobs, the increase in employment in November was upwardly revised to 280,000 jobs from 252,000 jobs.

With the combined revisions, job growth in November and December was only 2,000 jobs lower than previously reported.

The Labor Department also said the unemployment rate edged down to 4.9 percent in January from 5.0 percent in December, while economists had expected the rate to come in unchanged.

The unexpected decrease pulled the unemployment rate down to its lowest level since a matching rate in February of 2008.

"It is difficult to see exactly what the Fed will make of this," said Rob Carnell, Chief International Economist at ING Commercial Banking. "But with global financial conditions tightening, this release says 'more data needed' before drawing any firm conclusions about any shift in Fed policy."

"That does at least suggest that a March hike remains off the table," he added. "And hopefully by then, we will have a better idea of whether things are really slowing, with no further hikes possible, or whether recent data were just a soft patch and the Fed can resume tightening later in the year."

A separate report from the Commerce Department showed that the U.S. trade deficit widened more than expected in December amid an increase in imports and a decrease in exports.

Internet stocks are seeing substantial weakness in early trading, resulting in a 5 percent loss by the Dow Jones Internet Index. With the steep decline, the index has fallen to its lowest intraday level in a year.

Software, biotechnology, and semiconductor stocks are also seeing considerable weakness, contributing to the steep loss being posted by the tech-heavy Nasdaq.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index slumped by 1.3 percent, while Hong Kong's Hang Seng Index advanced by 0.6 percent.

The major European markets have also turned mixed on the day. With the U.K.'s FTSE 100 Index is up by 0.5 percent, the French CAC 40 Index is down by 0.4 percent and the German DAX Index is down by 0.9 percent.

In the bond market, treasuries have moved to the downside over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 1.893 percent.