(March 7): A weak jobs report hit stocks at a time when a widening war in the Middle East is lifting oil prices and fuelling inflation jitters. Anxiety about the private-credit industry also reduced risk appetite. Bitcoin tumbled.
Friday’s 1.3% slide in the S&P 500 sent the gauge to its worst week since October. Financial shares sank, with BlackRock Inc down 7.7% after curbing withdrawals from a private-credit fund. Chipmakers plunged as Oracle Corp and OpenAI scrapped plans to expand an artificial-intelligence data centre in Texas. US oil topped US$90 ($114.72), notching its biggest-ever weekly gain. Short-dated bonds outperformed as traders boosted bets on Federal Reserve rate cuts.
With no sign of a let-up in hostilities in the Middle East, the conflict is unleashing a wave of disruption across energy markets and sparking inflation fears. Even before the war, Fed officials had been more attuned to price pressures. But the latest jobs data can change that.
Nonfarm payrolls fell 92,000 last month, one of the largest declines since the pandemic. While some of the downside was expected, like a temporary dent from striking healthcare workers and a potential hit from bad weather, a wide array of industries cut jobs. The unemployment rate rose to 4.4%.
The unexpected hiring slump threatens to upend the prevailing view among policymakers that a stabilising labour market will allow them to keep rates steady as they fight persistent inflation.
A negative payrolls number combined with a jump in oil prices will have traders worrying about stagflation risks, according to Brian Jacobsen at Annex Wealth Management.
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The latest jobs numbers may have put the Fed between a rock and a hard place, said Ellen Zentner at Morgan Stanley Wealth Management.
“Significant weakening in the labour market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines,” she added.
Fed Governor Christopher Waller said on Bloomberg TV he doesn’t expect the war to have a sustained impact on inflation. Fed Bank of San Francisco President Mary Daly told CNBC that job weakness shows risks persist.
See also: BofA’s Hartnett sees European, Japanese stocks at risk from Mideast war
While the latest jobs report precedes the Iran conflict, the spike in oil prices raises the probability of stronger energy inflation, said Andy Schneider at BNP Paribas.
“Modest increases in oil prices, even if sustained, have transitory effects on US headline inflation and minimal effects on US core inflation,” said Michael Gapen at Morgan Stanley. “The Fed can look through these increases, but with inflation above target as long as it has been, even modest oil price pressures could delay rate cuts.”
Absent second-round effects or rising inflation expectations, he says Fed hikes have a high bar. A substantial rise in oil prices could weaken activity, acting like an uncertainty shock and putting rate cuts in play, Gapen noted.
If the labour market keeps losing steam, it becomes a more delicate backdrop — especially with geopolitical uncertainty on the rise and energy prices capable of acting as an added tax at the gas pump, according to Bret Kenwell at eToro.
“This may not change the Fed’s decision this month, but a visibly weakening jobs market is the kind of trend that can pull the Fed in a more dovish direction as 2026 unfolds,” he said. “Regardless of interest rates, a deteriorating jobs market is not what investors want to see.”
Corporate highlights:
- Boeing Co is closing in on one of the largest sales in its history, a 500-aircraft order for 737 Max jets set to be unveiled when President Donald Trump travels to Beijing for his first state visit to China since 2017, people familiar with the matter said.
- Marvell Technology Inc soared after delivering a bullish sales outlook, saying that data-centre demand was growing even faster than anticipated.
- Gap Inc sank after reporting sales and profit that came in slightly below expectations as two of its apparel chains underperformed.
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Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.3% as of 4pm New York time
- The Nasdaq 100 fell 1.5%
- The Dow Jones Industrial Average fell 0.9%
- The MSCI World Index fell 1.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1615
- The British pound rose 0.3% to US$1.3399
- The Japanese yen fell 0.2% to 157.83 per dollar
Cryptocurrencies
- Bitcoin fell 4.2% to US$68,146.71
- Ether fell 4.8% to US$1,980.21
Bonds
- The yield on 10-year Treasuries was little changed at 4.14%
- Germany’s 10-year yield advanced two basis points to 2.86%
- Britain’s 10-year yield advanced nine basis points to 4.63%
Commodities
- West Texas Intermediate crude rose 12% to US$90.92 a barrel
- Spot gold rose 1.6% to US$5,164.30 an ounce
Uploaded by Chng Shear Lane
