U.S. stocks dropped on Friday, weighed down by rising Treasury yields after data showed job growth slowed in September, while wage increases were not enough to fan worries over rising inflation or faster interest rates hikes.
The losses were led by heavyweight stocks in the technology and communication services sectors, with the so-called FAANG group – Facebook
Non-farm payrolls increased less than expected in September, likely due to the effect of Hurricane Florence, though data for July and August was revised higher, a Labor Department report showed.
The report pushed longer-dated U.S. Treasury yields higher. That piled more pressure on U.S. stocks, which are trading near record-high levels, raising concerns about valuations with the earnings season just around the corner.
"It all has to do with interest rates going up. Since the financial crisis we have had an accommodative monetary policy that has injected a lot of liquidity into the markets and zapped volatility," said Massud Ghaussy, senior analyst at Nasdaq in New York City.
"Now that`s being reversed, so all these overpriced valuations are coming down and we`re seeing the markets drop as interest rates are being normalized ... and high beta names like tech sector will take the greatest hit."
The technology sector <.splrct> sank 1.2 percent, dropping for the second day in a row. Besides Apple, the big-name laggards included Intel
The communication services sector <.splrcl>, which houses Netflix, Facebook and Alphabet, dropped 0.9 percent.
At 11:39 a.m. ET the Dow Jones Industrial Average <.dji> was down 167.75 points, or 0.63 percent, at 26,459.73, the S&P 500 <.spx> was down 13.71 points, or 0.47 percent, at 2,887.90 and the Nasdaq Composite <.ixic> was down 82.72 points, or 1.05 percent, at 7,796.79.
The defensive utilities <.splrcu> and real estate <.splrcr> indexes rose 1 percent each and were the only gainers among the 11 major S&P sectors.
Declining issues outnumbered advancers for a 1.92-to-1 ratio on the NYSE and a 2.07-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and 14 new lows, while the Nasdaq recorded 15 new highs and 88 new lows.
(This version of the story corrects quote in paragraph 6 to "high beta" not "high data")
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)