A sharp sell-off in New York led by the major technology stocks capped a day of losses on major global markets on Friday.
US jobs data for last month, showing a fall in the unemployment rate to 4.9 percent and a gain in wages growth, sparked new worries that the US Federal Reserve could decide to raise interest rates again as soon as next month.
Meanwhile, concerns about weak growth in the eurozone and emerging-market economies added to fears about a global slowdown.
Photo: AFP
Investors dumped major US technology stocks in a heavy sell-off spurred by the Fed rate worries.
Amazon.com Inc, Netflix Inc, Adobe Systems Inc, Priceline Group Inc, Twitter Inc and Facebook Inc all shed more than 5 percent to pull the NASDAQ Composite Index back to levels last seen in October 2014.
Also taking a beating were Dow Jones Industrial Average blue chips such as Nike Inc, down 5 percent, and McDonald’s Corp, 4.4 percent lower, amid worries that they would also be hit by the slowing global economy.
The Dow Jones Industrial Average dropped 1.3 percent and the broader S&P 500 lost 1.9 percent, while the NASDAQ Composite shed a hefty 3.3 percent.
The US Department of Labor’s jobs report for last month showed a slowdown in hiring, but the US unemployment rate fell to an eight-year low of 4.9 percent and wage growth picked up modestly — both data points that support the Fed further tightening policy in the coming months.
Alan Skrainka of Cornerstone Wealth Management said he was surprised at the reaction to what was from all sides a modest jobs report.
He said that it appeared the market believes the Fed “is committed to hiking rates while the economy is showing a bit of weakness here and people are worrying it’s going to throw itself into a recession.”
Shares in London, Frankfurt and Paris all dipped following the US jobs data.
Germany’s DAX led Europe’s main bourses into negative territory, closing more than 1 percent lower, followed by slightly smaller losses on the FTSE 100 in London and France’s CAC 40.
Overhanging the markets was new data showing German industrial orders, a key measure of demand for goods in Europe’s top economy, declined in December last year, weighed down by falling domestic and eurozone demand.
Provisional data showed a decrease in orders of 0.7 percent month-on-month in December, following an increase of 1.5 percent in November last year.
The US dollar gained against most major currencies after the jobs report, trading 5.1 percent higher against the euro at US$1.1158 from the same time on Thursday.
“The Federal Reserve may be worried about global market volatility and low commodity prices, but it will be difficult for them to ignore an unemployment rate below 5 percent and earnings growth at its strongest level in a year,” Kathy Lien of BK Asset Management said.
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