Wall Street Opens Lower as Labor Report Tests Market Nerve; Dow Down 30 Pts

© Reuters.

By Geoffrey Smith 

Investing.com -- U.S, stock markets were mostly lower at the opening on Friday, struggling to hold their nerve after being spooked by a labor report that hinted at sustained strong wage growth and inflationary pressure.

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was down 37 points, or 0.1%, at 36,199 points, on course to end a volatile week roughly unchanged. The S&P 500 was down by a similar amount, while the Nasdaq Composite, despite a 0.1% gain, remained on course for a weekly drop of 3.5% - its worst week in nearly a year. The S&P is set to close the week down 1.6%.

Earlier, the Labor Department had said in its monthly report on the labor market that average hourly earnings grew 0.6% in December, faster than the 0.4% expected. November's figure was also revised higher. That, combined with a sharper-than-expected drop in the unemployment rate, outweighed a second straight miss in the headline job creation figure, which rose by only 199,000, compared to expectations of 400,000.

"This latest jobs report will comfort the Fed into thinking its hawkish policy pivot is justified with the economy making progress toward maximum employment," Oxford Economics' analyst Greg Daco said in a note to clients. Daco said he expects headline job growth numbers to remain soft in the first quarter of the year due to the impact of Omicron-variant Covid-19, but nonetheless expects the unemployment rate to fall to 3.5% of the workforce by year-end. 

One stock bucking the general trend in early trade was GameStop (NYSE:GME), which rose 17% after The Wall Street Journal reported that the videogames retailer is looking at setting up a marketplace for non-fungible tokens, digital assets that are often bought and sold with digital currency. As such, the move may open up a new stream of revenue for 2021's archetypal "meme stock," which has otherwise struggled to justify the optimism behind its surge early last year.

Other stocks catching the eye early included Roku (NASDAQ:ROKU) stock, which fell 3.6% after the streaming device maker said Scott Rosenberg will step down as head of its platform business. Roku stock is a prime example of the technology stocks that have been under the most pressure in the last week, as the prospect of a sharp tightening of monetary policy by the Federal Reserve forces a reappraisal of valuation models built on assumptions of cheap money forever. Despite losing 60% from its 2020 peak already, Roku still trades at 93 times trailing earnings and doesn't expect to make a meaningful profit in the current quarter.

Elsewhere, Walt Disney (NYSE:DIS) stock rose 0.4% after announcing further details of its plans to expand into the so-called 'Metaverse', while Chevron (NYSE:CVX) stock continued to defy the bad news coming out of Kazakhstan, which is home to one of its biggest cash-generating projects. Kazakhstan's President Tokayev said on Friday he had ordered the military to shoot protesters without warning. Chevron had confirmed earlier in the week that workers at the Tengizchevroil project were among those who had demonstrated against the government, before the arrival of troops from the Russian-led CSTO alliance. Chevron stock rose 0.5%.