US stocks opened lower on Friday morning as traders digested a strong jobs report that showed a resilient labor market but brought into question whether the Federal Reserve will pivot towards interest rate cuts early next year.
The US economy added 199,000 jobs in November, according to Bureau of Labor Statistics data. The unemployment rate fell to 3.7% from 3.9% the month before.
Economists were expecting net job gains of 180,000 for the month and for the unemployment rate to hold steady.
The Dow dropped 33 points, or 0.1%, on Friday morning. The S&P 500 fell 0.2% and the Nasdaq was down 0.4%.
Treasury yields popped on the news, with the benchmark 10-year Treasury yield crossing 4.25% on Friday morning.
While a strong labor market is good for Main Street, Wall Street views it as a signal that the Federal Reserve could keep interest rates higher for longer.
“Fed Chair Powell will likely find reports like this, along with the recent dramatic shift in investor expectations, as creating a need for more hawkish messaging at the upcoming Fed meeting,” said Jason Pride, chief of investment strategy and research at Glenmede, in a note on Friday. The central bank’s policymaking committee is set to meet next week, on December 12-13.
Before Friday’s report, financial markets saw a 58% chance that the Federal Reserve would cut interest rates at its March policy meeting, according to the CME FedWatch Tool. That fell to 49% following the report.
Both the Dow and S&P 500 are tracking towards a losing week, breaking a five-week winning streak.
In corporate news, shares of Carrier Global were nearly 5% higher after the company said it would sell its global access solutions business to Honeywell. Shares of Honeywell, meanwhile, fell 1.4% on the news.
