Stocks Move Modestly Lower Following Jobs Report - U.S. Commentary

(RTTNews) - After seeing initial strength, stocks have moved modestly lower over the course of morning trading on Friday. The major averages have pulled back into negative territory, although selling pressure has remained subdued.

Currently, the major averages are off their lows of the session but still in the red. The Dow is down 40.47 points or 0.2 percent at 18,228.03, the Nasdaq is down 9.96 points or 0.2 percent at 5,296.89 and the S&P 500 is down 5.79 points or 0.3 percent at 2,154.98.

The weakness on Wall Street comes following the release of a report from the Labor Department showing that employment increased by less than expected in the month of September.

The report said non-farm payroll employment climbed by 156,000 jobs in September compared to economist estimates for an increase of about 176,000 jobs.

While the job gains in August were upwardly revised to 167,000 from 151,000, the job growth in July was downwardly revised to 252,000 from 275,000.

The Labor Department also said the unemployment rate edged up to 5.0 percent in September from 4.9 percent in August. Economists had expected the unemployment rate to remain unchanged.

Meanwhile, the report said average hourly employee earnings rose by 6 cents to $25.79. Compared to the same month a year ago, average hourly earnings were up by 2.6 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the modest job growth combined with the uptick in the unemployment rate "won't stop the Fed from hiking interest rates at the December FOMC meeting, but it should quell any speculation of a move at the November meeting."

Most of the major sectors are showing only modest moves on the day, but significant weakness has emerged among chemical stocks. Reflecting the weakness in the chemical sector, the Dow Jones Chemicals Index has fallen by 1.5 percent.

PPG Industries (PPG) is leading the chemical sector lower after warning of much weaker than expected third quarter earnings.

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Friday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.6 percent, the German DAX Index and the French CAC 40 Index are down by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries are showing a lack of direction after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.739 percent.