By STAN CHOE (AP Business Writer)
NEW YORK (AP) — Stocks are dipping Friday as worries about the banking system outweigh a highly anticipated report that showed pay raises for workers are slowing and other signals Wall Street wants to see of cooling pressure on inflation.
The S&P 500 was 0.2% lower in midday trading after paring a sharper morning loss. The Dow Jones Industrial Average was up 46 points, or 0.1%, at 32,301, as of 11 a.m. Eastern time, while the Nasdaq composite was 0.3% lower.
Some of the market’s sharpest drops were coming from the financial industry, where stocks tanked for a second day.
SVB Financial, a Silicon Valley bank that caters to the industry surrounding startup companies, has plunged more than 60% this week as it raises cash to relieve a crunch. Analysts have said SVB Financial is in a relatively unique situation, but it’s still led to concerns a broader banking crisis could erupt. SVB’s stock was halted Friday morning.
Friday’s struggles come amid what strategists in a BofA Global Research report called “the crashy vibes of March.” Markets have been twitchy recently on worries that high inflation is proving difficult to drive down, which could force the Federal Reserve to reaccelerate its hikes to interest rates.
Such hikes can undercut inflation by slowing the economy, but they also drag down prices for stocks and other investments and raise the risk of a recession later on.
Wall Street already in February gave up on hopes that cuts to interest rates could come later this year. Worries then flared higher this week that rates are set to go even higher than expected after the Fed said it could reaccelerate the size of its rate hikes.
Friday’s jobs report helped calm some of those worries. Overall hiring was hotter than expected, which could be a sign the labor market remains too strong for the Fed’s liking despite the fastest set of rate hikes in decades.
But the data also showed a slowdown from January’s jaw-dropping hiring rate. More importantly for markets, average hourly earnings for workers rose by 0.2% in February from January.
That was a slowdown from January’s 0.3% gain, and it was lower than the 0.4% acceleration that economists expected. This number is crucial on Wall Street because the Fed is focusing on wage growth in particular in its fight against inflation. It worries too-high gains could cause a vicious cycle that …read more
Source:: The Mercury News