Benchmarks ended Friday’s session in the red after jobs report raised concerns of a rate hike in September. The Dow hit a six-month low, while the index posted its longest losing streak on Friday since Aug 2011. For the week, the benchmarks also settled in negative territory following massive fall in media shares.
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The Dow Jones Industrial Average (DJI) lost 0.3% to close at 17,373.38.The Standard & Poor’s 500 (S&P 500) also declined 0.3% to 2,077.57. The tech-laden Nasdaq Composite Index closed at 5,043.54, losing 0.3%. The fear-gauge CBOE Volatility Index (VIX) dropped 2.8% to settle at 13.39. A total of around 6.7 billion shares were traded on Friday, lower than the last five-session average of 7 billion. Decliners outpaced advancing stocks on the NYSE. For 57% stocks that declined, 40% advanced.
The Dow ended in the red for the seventh straight session on Friday, its longest losing streak since the debt ceiling drama in 2011. The blue-chip index lost almost 380 points in these seven sessions. The Dow’s 50-day moving average is just shy off 23 points from going below the 200-day moving average. On Aug, 24, 2011, the Dow’s 50-day moving average had gone below the 200-day moving average, a phenomenon known as “death cross”.
Benchmarks finished in negative territory after July’s jobs report intensified fears of a possible rate hike as soon as September. The Fed in their recent meetings had said that the central bank will raise rates gradually. They will also look into data on further improvement in labor market conditions before deciding on hiking rates.
According to the Bureau of Labor Statistics (BLS), the U.S. economy created a total of 215,000 jobs in July. The tally was less than June’s upwardly revised job numbers of 231,000. However, the unemployment rate in July remained unchanged from June’s seven-year low rate of 5.3%. The consensus estimated unemployment rate to increase to 5.4%. Meanwhile, the average hourly earnings gained 0.2% in July from previous month’s figure to $24.99 per hour, in-line with the consensus estimate.
Meanwhile, expectations of a rate hike boosted the dollar. Stronger dollar eventually had a negative impact on prices of oil and other commodities. Baker Hughes Incorporated’s report that oil rig counts increased to 670 last week from 664 also dragged oil prices down.
Price of WTI crude oil declined 1.8% to $43.87 per barrel on Friday, its lowest level in more than four months. WTI crude oil price dropped 6.9% for the week, its largest in four weeks. Additionally, the Brent crude oil declined 1.9% to $48.61 per barrel, its lowest level since January. Brent crude oil also had a 6.9% weekly fall, it’s largest since March.
The Energy Select Sector SPDR (XLE) declined 1.8%, the highest among the S&P 500 sectors. Energy shares dropped due to the slump in oil prices. Dow components Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) declined 1.6% and 1.7%, respectively. Other key stocks from the energy sector including Schlumberger Limited (SLB - Free Report) , ConocoPhillips (COP - Free Report) and Transocean Ltd (RIG - Free Report) decreased 1.6%, 2.9% and 1.9%, respectively.
The Materials Select Sector SPDR ETF (XLB) declined 1.4% and was the second biggest decliner among the S&P 500 sectors. Key stocks from the sector including E. I. du Pont de Nemours and Company , Monsanto Company , The Dow Chemical Company (DOW - Free Report) , Praxair Inc. and LyondellBasell Industries N.V. (LYB - Free Report) decreased 1.9%, 0.9%, 2.4%, 0.2% and 3.5%, respectively. Overall, 6 out of 10 sectors of the S&P 500 ended in the red.
For the week, the S&P 500, the Dow and the Nasdaq declined 1.2%, 1.8% and 1.6%, respectively. Possible rate hike fears along with massive decline in media shares dragged down major indexes to the red for the week. A steep decline in TV-subscribers weighed on the earnings results of major media companies including Viacom, Inc. (VIAB - Free Report) . Separately, the Dow ended in the red as disappointing earnings performance of The Walt Disney Company (DIS) weighed on the blue-chip index, while a significant decline in Apple Inc.’s (AAPL) shares also weighed on broader markets.