Stock futures fell as an unexpected surge in jobs in January spiked bond yields and reaffirmed to investors the Federal Reserve would continue with its plan to raise interest rates as soon as March.
Futures on the Dow Jones Industrial Average fell 156 points, or 0.4%. S&P 500 futures lost 0.4%. Nasdaq 100 futures shed 0.5% despite a big gain in Amazon in premarket trading.
The 10-year Treasury yield jumped above 1.9%, its highest level since January 2020, after the January jobs report showed a 467,000 gain in payrolls. Economists polled by Dow Jones had expected a minor gain of 150,000 and some economists predicted a large decrease. Economists had cautioned before the report it could be noisy because of an omicron wave hitting while the survey was taking place.
The 10-year yield has jumped from 1.51% to end 2021 as the Fed pivoted to more aggressively fight inflation, signaling it would slow down its bond buying and raise rates several times this year. Higher rates have weighed on stocks, especially tech shares with high valuations. The S&P 500 is down 6% this year.
Futures fell despite several technology stocks posting huge premarket gains following strong quarterly results. Amazon jumped 12.4%, Pinterest surged more than 13% and Snap rocketed up around 46% the day after reporting earnings.
In earnings news, Ford Motor missed estimates by a wide margin, with profit reported Thursday of 26 cents a share well below the consensus of 45 cents. Shares tumbled 5% in premarket trading.
Friday’s moves come the day after a tech rout spurred by a disappointing earnings report from Facebook parent Meta. The company’s weak results sent the mega-cap tech stock lower Thursday and weighed on equity markets.
After Facebook’s quarterly results, “everyone just gave up and sold the whole sector. That was clearly the wrong read,” Rich Greenfield of Lightshed Partners told CNBC’s “Closing Bell” on Thursday. “What’s going to be really interesting is how investors start to look at these companies more individually versus … this whole sector.”
On Thursday, the Nasdaq Composite, which is tilted towards tech shares, fell 3.7% for its worst daily performance since September 2020. The S&P 500 had its worst day in nearly a year, sliding 2.4%. The Dow Jones Industrial Average fell 518.17 points.
“The sharp drop in FB market cap today and the accompanying drag on the S&P500 index is … a stark reminder of the high concentration of mega-cap Tech stocks in the S&P 500 — and the vulnerabilities that such concentration brings,” Goldman Sachs’ Chris Hussey said in a note Thursday.
Meanwhile, U.S. oil prices topped $90 per barrel for the first time since 2014, heightening inflation concerns.