By Investors Hub
The major U.S. index futures are pointing to a sharply lower opening on Monday, with stocks poised to extend the sell-off seen last week.
Concerns about higher interest rates may weigh on Wall Street, although analysts have noted that the markets are due for correction following recent strength.
With traders worried about the prospect of higher interest rates, stocks moved sharply lower over the course of the trading session on Friday. The sell-off on the day extended the pullback off record highs seen earlier this week.
The major averages ended the day just off their lows of the session. The Dow tumbled 665.75 points or 2.5 percent to 25,520.96, the Nasdaq slumped 144.92 points or 2 percent to 7,240.95 and the S&P 500 dove 59.85 points or 2.1 percent to 2,762.13.
For the week, the Dow plummeted by 4.1 percent, while the Nasdaq and the S&P 500 plunged by 3.5 percent and 3.9 percent, respectively.
The concerns about higher interest rates came after the Labor Department released a report showing stronger than expected job growth and a jump in wages.
The report said non-farm payroll employment surged up by 200,000 jobs in January after climbing by an upwardly revised 160,000 jobs in December.
Economists had expected employment to increase by about 180,000 jobs compared to the addition of 148,000 jobs originally reported for the previous month.
The Labor Department said the unemployment rate came in at 4.1 percent in January, unchanged from the three previous months and in line with economist estimates.
Meanwhile, the annual rate of growth in average hourly employee earnings accelerated to 2.9 percent in January from an upwardly revised 2.7 percent in December.
“Given companies such as WalMart have credited Trump’s tax cuts as a way for them to afford higher worker pay we suspect we will see the wage numbers pick-up further,” said James Knightley, Chief International Economist at ING.
He added, “Consequently, it will need a big shock to prevent the Fed from hiking in March, but it could happen in the form of a damaging government shutdown should politicians fail to resolve their differences.”
A negative reaction to quarterly results from big name tech companies like Google parent Alphabet (GOOGL) and Apple (AAPL) also contributed to the sell-off.
Energy stocks turned in some of the market’s worst performances on the day, with the S&P Energy Index plunging by 4.1 percent. The index fell to its lowest closing level in a month.
Industry giant Exxon Mobil (XOM) posted a steep loss after reporting fourth quarter earnings that came in below analyst estimates.
Substantial weakness was also visible among computer hardware stocks, as reflected by the 4.1 percent slump by the Dow Jones Computer Hardware Index. With the drop, the index hit a three-month closing low.
Steel, gold, housing, and airline stocks also moved sharply lower on the day, reflecting the broad based weakness on Wall Street.
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