The major stock market indexes' losses deepened Friday afternoon, but managed to close above the lows of the day. The market couldn't recover from being spooked by the stronger-than-expected September jobs report.
The Nasdaq composite was hardest hit, down 3.8%, while the S&P 500 lost 2.8% and the Dow Jones Industrial Average 2.1%. The Russell 2000 small-cap index fell 2.9%, better than the Nasdaq 100-tracking Invesco QQQ Trust's 3.8% loss. The Dow Jones was down over 700 points earlier in the session.
All the major indexes are still positive for the week despite the three-day slide, which started with a reversal at their 21-day exponential moving averages.
Volume on the NYSE and the Nasdaq was higher vs. the same time on Thursday.
Crude oil added 4.8%, rising above the psychological $90 level to $92.65 per barrel. The SPDR Select Energy ETF edged down 0.8%.
The 10-year Treasury note yield ticked up to 3.89% on the strong labor data. Bitcoin pulled back 3% to $19,420 after failing to hold the $20,000 level.
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Payrolls Strong, Unemployment Down
September nonfarm payrolls grew by 263,000 vs. the 250,000 Econoday estimate. The unemployment rate ticked down to 3.5%, below the 3.7% consensus and August rate. Private payrolls rose by 288,000, beating expectations by 8,000. The participation rate slid 2.1% to 62.3%.
"The September jobs report reinforced the fact that the labor market remains tight and will keep the Fed on course for continuing to aggressively tighten monetary policy. There continues to be a labor supply problem, with the participation rate moving the wrong direction and dragging the unemployment rate lower for the wrong reasons," said Cliff Hodge, chief investment officer of Cornerstone Wealth.
As of Friday, 81.6% of analysts polled expected the Fed to raise rates by 75 basis points at its Nov. 2 meeting, while 18.4% looked for a 50-basis-point hike, according to the CME FedWatch Tool.
European markets also sold off on U.S. data, with the German DAX stock index down 1.6%, Paris CAC 40 1.2% and London FTSE 100 down 0.1% to close out the trading week.
Stock Market Winners: Oil Stock Breaks Out, Tanker Stock Rises
Oil stocks continued to rise after OPEC+ agreed to a 2 million barrel production cut earlier in the week.
Sector favorite Denbury pulled back 0.3% after an earlier gain, and broke out of a cup base, hitting the 94.05 buy point on the MarketSmith chart. The stock's relative strength line hit a new high as well, as indicated by the blue dot on IBD charts. Denbury holds pristine 99 Composite and EPS Ratings, and a strong 97 Relative Strength Rating.
Marine petroleum transporter Scorpio Tankers rose 2.7%, after the company announced they bought back common shares in the last few days. The company holds a rising 96 Composite Rating.
Medical device manufacturer Dexcom gapped up 7.3% on news that Piper Sandler raised its price target to 120 while maintaining its overweight rating. The move pushed the stock above its 200-day moving day average. Dexcom was the S&P leader today.
DXCM stock rallied 7.1% on Tuesday after the company announced that a new glucose monitoring system was available in four European countries, for people aged 2 years and older with diabetes. Shares have been trending higher since the news.
Chipmaker AMD plunged 13.9% after cutting Q3 revenue and gross margin guidance late Thursday. The stock is on pace to close at its lowest level since July 2020. The news rattled analysts, with Deutsche Bank lowering its price target to 80 from 95. However, it maintained the chipmaker's hold rating.
Lantheus gapped down 12.4% on heavy volume, sinking below its 21-day line.
The stock is being replaced in the S&P SmallCap 600 on Oct. 12 with Payoneer Global, which traded higher by 1.8%. Payoneer is in the buy zone of a cup base with a 7.36 buy point and its relative strength line just rose to a new high.
IBD 50: Energy Stocks Move On High Relative Strength Lines
The Innovator IBD 50 ETF dropped 2.9%, in line with the major stock market indexes. Despite the recent down days, shares are positive for the week, although off the highs.
Three oil and gas stocks hitting new highs on their relative strength lines today include: Pioneer Natural Resources up 0.1%, Devon Energy which rose, then dropped 0.3% and Ovintiv which closed down 0.4%.
ConocoPhillips added 0.7% and is in the 5% buy zone of a cup-with-handle base with a buy point of 115.57 on the chart.
Cross Country Healthcare added 2.5% and is extended from a cup-with-handle base with a buy point of 27.87.
Clean energy producer APA rose 0.8% and is in a long cup base with a buy point of 52.05. APA has a 99 Composite Rating and a 97 Relative Strength Rating.
ON Semi sank 7.7% as chipmakers fell after the AMD warning. The decline triggered the 7% sell rule of a consolidating base with a buy point of 71.35. The move pushed ON shares below its 50-day and 21-day exponential moving averages.
