- NFPs rise by just 74,000 due to weather
- Focus now on Fed ahead of policy meeting
- Alcoa disappoints as Q4 earnings season begins
Dow Jones: -0.28%
S&P 500: -0.17%
The lowest increase in monthly non-farm payrolls since 2008 prompted a cautious start on Wall Street on Friday, as investors attempted to work out what impact the data would have on the future of Federal Reserve stimulus.
The three major equity benchmarks in New York edged lower in early trade, with the Dow Jones Industrial Average falling 0.3% and the Nasdaq and S&P 500
"After the gasps came headscratching. If ever there was a curveball, this was it," said Marcus Bullus, Trading Director at MB Capital. "These limp numbers are as puzzling as they are surprising - and they caught the markets with their guard down."
Jobs report shock
US non-farm payrolls increased by just 74,000 in December, according to the Bureau of Labor Statistics, significantly lower than the 241,000 gain in November, with poor weather conditions largely to blame. While the previous two months' gains were revised higher by a combined 38,000, December's data came as a real shock to analysts who had expected a reading closer to 193,000.
In fact, market chatter ahead of the figures had suggested that last month's data may have come in ahead of expectations. The focus has now turned to the Fed ahead of its policy meeting later this month, following December's decision to scale back its quantitative easing programme.
The unemployment rate unexpectedly declined from 7% to 6.7%, but the participation rate fell from 63% to 62.8%. This was the lowest level of participation in over three decades and is a cause for concern among economists as people continue to leave the labour force.
MB Capital's Bullus said: "All bets are now off on the Fed's tapering plans. Many are now questioning whether it began to turn off the QE [quantitative easing] taps too soon. If Janet Yellen was hoping to have any kind of honeymoon period when she takes over the top job, she can forget it."
Alcoa kicks off earnings season poorly
Results from aluminium producer Alcoa - regarded as the unofficial beginning to the new quarterly earnings season - failed to impress investors after the closing bell last night, with the stock falling sharply this morning after profits missed analysts' estimates.
Fashion retailer Gap gained after the group said it expects full-year profits to reach the upper end of its guidance, while Abercrombie & Fitch rallied after raising its annual earnings prediction. Jewellery firm Tiffany & Co also rose after holiday sales rose.
In contrast, retail peer Sears sunk sharply as investors reacted to a significant fall in same-store sales over Christmas and worse-than-estimated guidance.
The US 10-year Treasury yield was down nine basis points at 2.88% in morning trade.
West Texas Intermediate crude futures for February delivery were up 1.03%, or 94 cents, at $92.60 per barrel.