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Wall Street drops on paltry jobs growth, global slowdown worries

(Reuters) – Wall Street declined on Friday after data showed U.S. job growth almost stalled in February, adding to concerns of a slowdown in global growth sparked by weak China export data and a prolonged slowdown in eurozone.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 7, 2019. REUTERS/Brendan McDermid

The U.S. economy created only 20,000 jobs in February, compared with expectations of non farm payrolls rising by 180,000 jobs last month, according to economists polled by Reuters.

“The poor number indicates that we are suffering alongside the rest of the global economy and that it is having an impact on the U.S.,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“The U.S. has been the best house in a lousy neighborhood and maybe that is changing.”

However, other details of the closely followed employment report were strong. The unemployment rate fell back to below 4 percent and annual wage growth was the best since 2009.

The jobs report bolstered the Federal Reserve’s case for putting the interest rate hikes on hold, pushing the U.S. Treasury yields lower.

Shares of big banks dropped and pushed the interest-rate sensitive financials down 0.69 percent. Bank of America Corp, JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc and Morgan Stanley dropped between 1.5 percent and 1.7 percent.

Worries about global growth gained ground after exports in China, the world’s second largest economy, tumbled the most in three years in February. Chinese imports also fell for a third straight month, which stirred talk of a “trade recession”.

The dismal economic report follows decision by the European Central Bank to cut its growth forecasts and unveil a new round of stimulus.

Adding to investor nerves was a comment from U.S. ambassador to China that the two sides have yet to set a date for a summit to resolve their trade dispute as neither side feels an agreement is imminent, the Wall Street Journal reported.

Tariff sensitive Boeing Co fell 0.7 percent and was the biggest drag on the bluechip Dow index, while Caterpillar Inc edged 1.3 percent lower.

Losses in heavyweight FAANG group of stocks increased after Democratic Senator Elizabeth Warren said in blog post she would present a regulatory plan to break up some of America’s largest technology companies, including Amazon.com Inc, Alphabet Inc and Facebook Inc.

Shares of Facebook, Amazon, Apple Inc, Netflix Inc and Alphabet were trading down between 1.2 percent and 2 percent.

At 9:47 a.m. ET the Dow Jones Industrial Average was down 137.41 points, or 0.54 percent, at 25,335.82. The S&P 500 was down 17.94 points, or 0.65 percent, at 2,730.99 and the Nasdaq Composite was down 60.88 points, or 0.82 percent, at 7,360.58.

Wall Street’s main indexes are set for their fifth day of declines and were on pace for their steepest weekly fall since December after starting the year on a strong note.

The energy sector fell 2.48 percent as oil prices slid and Norway’s trillion-dollar sovereign wealth fund said it would drop oil and gas companies from its benchmark index and investment universe.

Oil majors ExxonMobil Corp and Chevron Corp dropped about 2 percent each.

The defensive real estate, utilities and consumer staples sector, were the only S&P sectors trading higher.

Declining issues outnumbered advancers for a 2.62-to-1 ratio on the NYSE and for a 2.58-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and five new lows, while the Nasdaq recorded 11 new highs and 32 new lows.

Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur


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