Stocks See Further Downside Following Early Pullback - U.S. Commentary

(RTTNews) - After moving modestly lower earlier in the session, stocks have seen some further downside in recent trading on Friday. The major averages have slid firmly into negative territory, hitting new lows for the session.

In recent trading, the major averages have climbed off their worst levels of the day. The Dow is down 89.40 points or 0.5 percent at 18,179.10, the Nasdaq is down 33.58 points or 0.6 percent at 5,273.27 and the S&P 500 is down 13.51 points or 0.6 percent at 2,147.26.

The weakness on Wall Street comes following the release of a report from the Labor Department showing that U.S. 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.

Speaking at the Institute of International Finance's annual meeting in Washington, D.C., Federal Reserve Vice Chair Stanley Fischer said the jobs data was "pretty close" to an ideal "Goldilocks" reading.

Fischer said the rate of job growth is "fully consistent" with a continued decline in unemployment and suggested the U.S. is close to full employment.

Analysts said the weaker than expected job growth should quell any speculation of an interest rate hike at Fed's next meeting in November, although a rate hike at the December meeting remains on the table.

Sector News

Chemical stocks have shown a substantial move to the downside on the day, dragging the Dow Jones Chemicals Index down by 1.9 percent. The pullback by the index comes after it ended the previous session at its best closing level in a month.

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

Significant weakness has also emerged among airline stocks, as reflected by the 1.4 percent drop by the NYSE Arca Airline Index. Ryanair (RYAAY) is posting a particularly steep loss.

Tobacco, natural gas, housing, and electronic storage stocks have also come under pressure, moving lower along with most of the other major sectors.

Other Markets

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 turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index advanced by 0.6 percent, the German DAX Index and the French CAC 40 Index both dropped by 0.7 percent.

In the bond market, treasuries are seeing modest weakness, extending a recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.7 basis points at 1.759 percent.