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Stocks End Down as December Jobs Report Shows Slower Hiring Growth

Stocks end down after December’s nonfarm payrolls report shows fewer-than-expected new jobs were created last month.

Stocks ended the first week of 2022 on a down note Friday, finishing lower after a key U.S. employment report showed slower-than-expected job growth in December amid the surging omicron variant of Covid-19.

The Dow Jones Industrial Average finished down 4 points, or 0.01%, to 36,231, while the S&P 500 was off 0.41% and the Nasdaq slipped 0.96%.

Both the S&P 500 and Nasdaq were down for the fourth-straight day and the tech-heavy Nasdaq saw its worst week since February 2021.

The Labor Department Friday reported payrolls increased by 199,000 in December, less than half the 422,000 new jobs expected by economists polled by FactSet.

Average hourly earnings increased by 0.6%, above expectations, while the unemployment rate fell to 3.9%, the lowest level since Feb 2020 and also below the 4.1% expected by economists. 

"The U.S. economy added less jobs than expected in December with only 199k payrolls added, but the current backdrop continues to point to tight labor market conditions," said Charlie Ripley, senior investment strategist for Allianz Investment Management. 

Specifically, he said, the participation rate was unchanged at 61.9% while the unemployment rate declined to 3.9%.

In addition, wage gains were stronger than expected as annual average hourly earnings rose to 4.7%, Ripley added.

"All things considered; today’s report should be eye-opening for the Fed as tight labor conditions are only going to exacerbate the building inflation problem," he said. 

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"Overall, it would be surprising if the Fed is not contemplating a faster removal of policy accommodation at the January meeting since the inflation story doesn’t seem to be cooling anytime soon."

Ryan Detrick, chief market strategist for LPL Financial, said "the headline number was quite disappointing but looking under the surface and we see that wages grew faster than expected and the unemployment rate is already beneath 4%."

"This likely means the Fed remains on target for a rate hike the first half of 2022.

ADP on Wednesday released an 807,000 tally, though the firm also expected the unemployment rate ticked up a notch to 4.2% from 4.1% amid tight hiring.

The yield on the 10-year U.S. Treasury hit 1.767% on Friday, sharply higher than last week’s 1.51% level. 

The move higher has hit growth-oriented areas of the market, since inflation eats into expectations for profits. 

Stocks finished lower on Thursday amid expectations that the Federal Reserve would pull back on economic stimulus sooner than expected to tamp down inflation.

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Google  (GOOGL) - Get Alphabet Inc. Class A Report infringed audio patents held by Sonos  (SONO) - Get Sonos, Inc. Report and is barred from importing some of its Nest audio speakers and other products, a U.S. trade agency ruled on Thursday.