European markets fell Friday, and U.S. stocks continued to fall as investors assessed what a key
U.S. jobs report means for interest rates in the world’s largest
economy.
The official payrolls report signaled that the U.S. economy added 173,000 jobs last month while the unemployment rate dropped to 5.1%.
Global markets were keying on the report as it comes before the Federal Reserve meets later this month to decide what’s next for U.S. interest rates. The current ultra-low rates have contributed to Wall Street’s six-year bull path.
Analysts now say that even if the Fed doesn’t raise interest rates at its September meeting, the report leaves little doubt that officials will soon vote to raise interest rates. The next hike would be the Fed’s first since 2006.
The Stoxx Europe 600 gave up 2.4% to 353.45, falling further after the nonfarm-payrolls report showed the U.S. added a modest 173,000 new jobs in August, the smallest gain in five months. Economists polled by MarketWatch had expected a gain of 213,000 jobs. But the unemployment rate fell to 5.1%.
The oil and gas, mining and financial sectors were the worst
performing in the European markets.
The Stoxx 600 was on track for a 2.9% fall for the week, which would mark its second loss in three weeks. The pullback is wiping out Thursday’s gain, which was driven by comments from Mario Draghi, president of the European Central Bank who said the bank is willing to act again if more stimulus is needed for the euro area economy.
In Frankfurt, the DAX 30 dropped 2.8% to 10,027.53. In Paris, the CAC 40 was down 3% at 4,515.54.
In the U.S., stock-index futures, which were already trading about 1% lower Friday, extended losses after the jobs report.
S&P 500 futures fell 28.85 points, or 1.5%, to 1,917.25
DJIA futures dropped 258 points, or 1.6%, to 16,090. Nasdaq-100 declined by 64.5 points, or 1.5%, to 4,165.
