NEW YORK CITY: A sharp selloff in New York led by the major tech stocks capped a day of losses on major global markets over the weekend.
US jobs data for last month, showing a fall in the unemployment rate to 4.9 percent and a gain in wages growth, sparked new worries that the Federal Reserve could decide to raise rates again as soon as March.
Meanwhile, concerns about weak growth in the eurozone and emerging-market economies added to fears about the global slowdown.
Investors dumped major US technology stocks in a heavy selloff spurred by the Fed rate worries.
Amazon, Netflix, Adobe, Priceline, Twitter and Facebook all shed more than five percent to pull the Nasdaq Composite Index back to levels last seen in October 2014.
Also taking a beating were Dow blue chips like Nike, down 5.0 percent, and McDonald’s, losing 4.4 percent, amid worries that they will also be hit by the slowing global economy.
The Dow Jones Industrial Average dropped 1.3 percent and the broader S&P 500 lost 1.9 percent, while the Nasdaq Composite shed a hefty 3.3 percent.
The Labor Department’s January jobs report showed a slowdown in hiring but the US jobless rate fell to an eight-year low of 4.9 percent and wage growth picked up modestly — both data points that support the Fed further tightening policy in the coming months.
Alan Skrainka of Cornerstone Wealth Management said he was surprised at the reaction to what was from all sides a modest jobs report.
He said that it appeared the market believes the Fed “is committed to hiking rates while the economy is showing a bit of weakness here and people are worrying it’s going to throw itself into a recession.”
Shares in London, Frankfurt and Paris all dipped following the US jobs data. Germany’s Dax led Europe’s main bourses into negative territory, closing more than one percent lower, followed by slightly smaller losses on the FTSE in London and France’s CAC.
Overhanging the markets was new data showing German industrial orders, a key measure of demand for goods in Europe’s top economy, declined in December, weighed down by falling domestic and eurozone demand.
Provisional data showed a decrease in orders of 0.7 percent month-on-month in December, following an increase of 1.5 percent in November.
The dollar gained against most major currencies after the jobs report, trading 5.1 percent higher against the euro at $1.1158 from the same time Thursday.
“The Federal Reserve may be worried about global market volatility and low commodity prices but it will be difficult for them to ignore an unemployment rate below five percent and earnings growth at its strongest level in a year,” Kathy Lien of BK Asset Management said.