US: Stocks drop as jobs data challenges Fed policy outlook

WALL Street stocks declined on Friday (Feb 3) after a blowout January jobs reports raised fresh questions about the outlook for monetary policy as markets digested disappointing earnings.

The United States added 517,000 jobs in January, nearly double the December figure, after a five-month slowdown in hiring, according to the data.

The report also showed unemployment edging down to 3.4 per cent, the lowest level since 1969.

The data calls into question investor assumptions that the Federal Reserve will soon pivot from a policy of aggressively hiking interest rates, an expectation that boosted stocks in January.

“It was a hot number,” said Angelo Kourkafas, an investment strategist at Edward Jones, who added that some of the losses may have been due to profit-taking.

The Dow Jones Industrial Average ended down 0.4 per cent at 33,926.01.

The broad-based S&P 500 dropped 0.8 per cent to 4,136.48, while the tech-rich Nasdaq Composite Index tumbled 1.6 per cent to 12,006.95.

Stocks were further pressured by a trove of mostly disappointing earnings.

Of the three tech giants that reported Thursday afternoon, both Amazon (-8.4 per cent) and Google parent Alphabet (-3.3 per cent) retreated, while Apple notched a 2.4 per cent gain.

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Ford was another loser, shedding 7.6 per cent after fourth-quarter results lagged expectations as the automaker blamed execution problems and difficulties managing costs. AFP