The stock market extended losses on Friday after the April jobs report showed the labor participation rate fell. Materials, real estate and communications stocks led declines.
With less than an hour to go before the close, the Nasdaq fell 2%, and the S&P 500 lost 1.2%. The Dow Jones Industrial Average fell 1%. The small-cap Russell 2000 index slid 2%.
Volume rose on the NYSE and Nasdaq compared with the same time on Thursday.
The Energy Select Sector SPDR Fund ETF, an energy market gauge, was the only S&P sector with sizable gains, up 2.1% Friday. Materials led on the downside, paced by metals stocks, followed by losses in communications stocks and real estate.
The key 10-year Treasury bond's yield surged 5 basis points to 3.12%, the highest point since late 2018. The yield is now approaching an 11-year high of 3.25%.
The Labor Department released its April jobs report showing a better-than-expected 428,000 nonfarm jobs returned across the U.S. economy last month. Economists expected nonfarm payrolls to rise by 400,000.
Labor Force Participation Rate Falls
The unemployment rate held steady from March at 3.6%, or just slightly above February 2020's multidecade low of 3.5%. The household survey, which is used to derive the unemployment rate, was at odds with the employer survey, showing that the ranks of the employed fell 353,000. The number of people participating in the labor force, meaning they're working or actively looking for a job, fell 363,000.
The Fed wants to see labor force participation increase, not fall.
Annual wage growth of 5.5% from a year ago was largely in-line with forecasts, and cooled slightly from March's 5.6%. While wage gains are strong, they're not keeping up with inflation. The annual CPI inflation rate hit 8.5% in March.
The price of crude oil jumped 2% to $110.45 a barrel.
Elsewhere in the stock market, Pioneer Natural Resources gained another 3.8% Friday. Oil and gas company Pioneer reported surging earnings and sales growth Wednesday night. PXD stock produced a narrow, less than three weeks, cup with a 258.90 buy point. Normally, good cup bases form over a minimum six weeks, or 30 trading days on a daily chart.
Cheniere Energy gained 3% Friday and moved closer to a 149.52 buy point in a flat base. Cheniere Energy reported a sizable first-quarter loss early Wednesday. But revenue leapt 142%, easily beating analysts' expectations.
Big Oil stocks also gained, with Chevron and BP up between 1% and 2%.
The increases come as Europe moves in the direction of an outright ban on Russian crude and OPEC seems unwilling to materially increase supply, sending prices higher.
Market Correction Extends Losses; Why Apple Is An 'Absolute Loser'
Materials Stocks Lead The Way Down For The Stock Market
MP Materials slid 6% after it beat first-quarter earnings and sales estimates late Thursday but reports said its guidance missed. Earnings for the stock market leader among small caps jumped 285% to 50 cents a share, beating views by 9 cents. Revenue grew 177% to $166.26 million, exceeding estimates of $137.49 million.
The strong results were supported by rising realized prices per metric ton of rare earth oxide, up 37% from Q4 and 135% from a year ago. Production volume grew 6% on the quarter and 10% from a year ago.
In a Friday morning note, Deutsche Bank analyst Sathish Kasinathan wrote that MP Materials guided prices and volume lower for Q2 amid semiannual planned maintenance and a recent correction in prices.
The Innovator IBD 50 ETF, a benchmark for growth stocks, fell 2.2%.
Biotechs In The Stock Market Today
Vertex Pharmaceuticals, a stock market leader now, reported mixed earnings Thursday evening. Shares traded at the bottom edge of a buy range after testing support at its 50-day line earlier in the week. The stock briefly became extended from a 255.04 buy point but shares have since pulled back.
VRTX is now dipping below its 50-day line, a bearish sign, after gapping down nearly 5%.
Follow Michael Molinski on Twitter @IMmolinski
