Stocks Slide After Jobs Report Sends Mixed Messages About U.S. Economy

Adding to the recent turbulence are shifting expectations for how quickly the Federal Reserve will wind down a bond-buying program put in place early in the pandemic — a move that is a precursor to interest rate increases, which are expected to begin next year. Friday’s jobs report wasn’t weak enough to change the market’s view that the Fed could push up the timing of rate increases as it looks to tamp down inflation.

“Beyond the disappointing headline number, which could be owing to seasonality quirks, the rest of the report is actually pretty strong and is unlikely to deter the Fed from its hawkish turn earlier in the week,” Fiona Cincotta, senior financial markets analyst at Forex.com, said in a note to clients.

Technology stocks were particularly hard-hit on Friday, and the tech-heavy Nasdaq composite dropped 1.9 percent. Apple, Alphabet, Facebook, Microsoft and Amazon were all lower. Together, those five companies account for more than 20 percent of the market value of the S&P 500, with movements from these stocks having a large impact on the direction of the stock market.

Investors had been pulling back on tech stocks all past week, with the Nasdaq outpacing the S&P 500’s declines.

“The market might have been a little too optimistic on the outlook for tech,” said Edward Moya, a senior market analyst at Oanda, a foreign currency exchange and brokerage firm. “Now they’re taking that risk off the table.”

Also weighing on the S&P 500 on Friday was Tesla. Shares of the electric vehicle-maker, which climbed above a market valuation of $1 trillion in October, fell more than 6 percent. The drop on Friday came a day after the company’s founder, Elon Musk, disclosed that he had sold another $1 billion in Tesla stock. Mr. Musk, who has been selling shares in part to cover tax obligations related to the exercise of stock options, has sold nearly $11 billion worth of the shares in recent weeks. But because he’s also gaining new shares thanks to those stock options, Mr. Musk’s stake in Tesla actually stands slightly higher.

Friday capped a tumultuous week for stock investors, which began after evidence of a new coronavirus variant was first reported by South Africa, prompting travel restrictions in several countries. Wall Street ended the day higher on Monday before dropping again on Tuesday after the Fed’s announcement that it would withdraw financial support from the economy quicker.

The first case of the Omicron variant in the U.S. was detected on Wednesday, driving shares lower. The S&P 500 is down nearly 4 percent since Omicron first began to make headlines.

Travel and leisure stocks continued to fall on Friday. Norwegian Cruise Line and Carnival were both down about 4 percent. Airline stocks were also lower.

Oil prices, which have been particularly unsteady in recent days, were slightly lower, with West Texas Intermediate, the U.S. crude benchmark, down 0.4 percent $66.26 a barrel after earlier having climbed above $69 a barrel.

On Thursday, officials from OPEC, Russia and other oil-producing countries said they would continue with a previously agreed-to program of gradually adding oil to the market.

Shares of the Chinese ride-hailing company Didi Chuxing plunged more than 22 percent after the company announced Friday that it would delist its shares from the New York Stock Exchange in favor of a listing in Hong Kong. Other Chinese companies listed in New York also fell, including the e-commerce giant Alibaba, which fell about 8 percent, and JD.com, which slid about 7.7 percent.

April

June

Sept.

Jan. ’21

April

–3.9 million jobs since Feb. 2020

+18.5 million since April 2020

+210,000

in November

152.5 million jobs in February 2020

Part of the puzzle on Friday arose because the Labor Department report is based on two surveys, one polling households and the other recording hiring among employers.

The survey of employers showed the addition of just 210,000 jobs in November on a seasonally adjusted basis, the year’s weakest showing. Economists had forecast a second straight gain of more than 500,000.

But good news abounded in the household survey, which showed that the total number employed, seasonally adjusted, jumped by more than 1.1 million. The unemployment rate fell to 4.2 percent from 4.6 percent.

“I don’t know that I’ve ever seen such an extraordinary gap between the two surveys,” said Diane Swonk, chief economist for the accounting firm of Grant Thornton in Chicago.

The overall participation rate, which measures the proportion of Americans who either have jobs or are looking for one, rose by 0.2 percentage point to 61.8 percent, its healthiest level since the pandemic hit. The rate for prime-age workers, 25 to 54 years old, also edged up.

There was a big increase in participation last month among Hispanic men and women, who were among the hardest hit by the pandemic.

Still, the lackluster hiring number was a reminder of the on-again, off-again pattern in the labor market since the pandemic began nearly two years ago. This month, job gains in businesses where face-to-face contact is required — like stores, restaurants, bars and hotels — were especially soft.

Retail employment dropped by 20,000 last month on a seasonally adjusted basis, while hiring in leisure and hospitality industries rose by 23,000, compared to a gain of 170,000 in October. The white-collar sector, which has largely shrugged off the worst effects of the pandemic, remained a source of strength, with a 90,000 jump in employment in professional and business services.

Hiring at factories jumped by 31,000, while transportation and warehousing gained nearly 50,000 workers, an indication of how online commerce is picking up speed ahead of the holidays.

Despite a fairly tight labor market, the economy is still roughly four million jobs short of prepandemic levels. About one-third of those positions are in the leisure and hospitality sector, which is vulnerable if the Omicron variant — which came to public attention after the November job surveys were conducted — turns out to be as much of a threat as the Delta strain.

“That’s the risk but it probably won’t show up before Christmas,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It could be an issue in the new year. We’re still dealing with the Covid pandemic and the risks are there for the economy and hiring.”

Many labor market analysts argue that there’s much room from employment growth because so many people have yet to return to the labor force, and because businesses overall are in a sturdy financial position with the capacity to expand both supply and their payrolls.

“To me, the most important question in the economy going forward is: Will companies improve jobs enough to entice people back into employment, and to face those higher risks?” said Aaron Sojourner, a professor at the University of Minnesota and a former economist at the Council of Economic Advisers for the previous two administrations. “The big wild card is the virus and our public health efforts, and second is the Fed and how they adjust.”

Throughout the fall, the economy’s path has been characterized by clashing signals.

The “quits rate” — a measurement of workers leaving jobs as a share of overall employment — has been at or near record highs, which suggests that workers are confident they can navigate the labor market to find something better. But the University of Michigan’s survey of consumer sentiment dropped to levels not seen since the sluggish recovery from the recession of 2007-9.

The report noted “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.” Shoppers are facing the steepest inflation in 31 years. In October, prices increased 6.2 percent from a year earlier.

Nonetheless, markets remain relatively calm. The major stock indexes are up by impressive levels this year. And bond yields, which tend to move higher in inflationary environments, remain near record lows, indicating that investors don’t see inflation as a longer-term threat to the economy or financial stability.

In recent days, the chair of the Federal Reserve, Jerome H. Powell, has faced pressure from different political camps to focus more tightly on price increases.

Critics of the Fed say the central bank’s “accommodative” bond-buying policies — which have kept borrowing costs low and led to a large and continued increase in the money supply — went on too long and were irresponsible in light of an already aggressive emergency response from Congress.

Fed officials, including Mr. Powell, still maintain that the price increases mainly reflect pandemic aberrations that will dissipate. But in congressional testimony on Tuesday, Mr. Powell signaled a pivot from revitalizing the economy to keeping a lid on prices.

“The economy is very strong, and inflationary pressures are high,” he said. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases.”

Economists are divided over the potential impact of a winter coronavirus surge. Some say it could cool off the economy, easing inflation, because it could inhibit in-person activities. Others say a new wave could raise prices further by complicating the logistics of supply chains.

John C. Williams, president of the Federal Reserve Bank of New York, told The New York Times on Wednesday that the new variant could “mean a somewhat slower rebound overall” yet “increase those inflationary pressures, in those areas that are in high demand.”

For consumers, one potentially positive effect of renewed virus fears is the recent pullback in energy prices, which have risen substantially this year. The spikes have been particularly intense for fuel oil — which is used for industrial and domestic heating — and for crude oil, which directly translates to gasoline prices at the pump.

One cure for increasing prices is for consumers’ take-home pay to keep up with them. And with many businesses eager to attract workers, wages for nonsupervisory workers continued their upward climb. Average hourly earnings were up 8 cents in November, to $31.03, and are 4.8 percent higher than a year ago — though that rate is exceeded by the most recent inflation readings.

Ben Casselman contributed reporting.

For about the past half year, the survey of households had been showing significantly weaker job growth than its sister survey — until last month, when it was much stronger. Economists generally put more trust in the employer survey, which has a much larger sample size. So the recent pattern suggests that the household survey had been undercounting employment and, in effect, caught up in November.

If that interpretation is correct, it means the household survey data released Friday overstates the one-month jump in the labor force. But it also implies that the labor force wasn’t as stagnant in recent months as previous monthly jobs reports implied. (The household survey data doesn’t get revised, unlike the employer survey, which has been repeatedly revised upward in recent months.)

Stronger labor force growth would be welcome news for policymakers at the Federal Reserve, who have been worried that the slow return of workers could contribute to inflation. Still, the data released Friday doesn’t indicate that the shortage has been fully resolved. Wages rose significantly in November, suggesting employers are still struggling to hire, and there are still 2.4 million fewer people in the labor force than before the pandemic began.

“Every year, December brings the joys of a holiday season and gives us an opportunity to reflect on the year gone by and look ahead and begin to imagine the new year to come,” he said. “This year, we can reflect on an extraordinary bit of progress. Our economy is markedly stronger than it was a year ago.”

“Thanks to the American Rescue Plans, we’re cutting child poverty in America by more than 40 percent,” Mr. Biden said a moment later, “and millions of children who spent last Christmas in poverty will not bear that burden this holiday season.”

But as he has done repeatedly in recent weeks, Mr. Biden proceeded to acknowledge the economic pain and frustration that many Americans are feeling, particularly from rising prices but also from the continued spread of the pandemic, which is killing around 1,000 Americans each day.

He also made clear that he sees the new strategy that he laid out this week to combat Covid over the winter as the most important policy tool at his disposal to further help the economy — and persuade voters that the recovery is benefiting them.

“Despite this progress, families are anxious,” he said. “Anxious about Covid. They’re anxious about the cost of living, the economy more broadly. They’re still uncertain. I want you to know I hear you. It’s not enough to know that we’re making progress. You need to see it and feel it your own lives around the kitchen table and your checkbooks.”

Republicans hammered Mr. Biden for the disappointing job gains without acknowledging the big drop in the unemployment rate. The Republican National Committee called it “the worst jobs report of the year.” Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, was even more dour. “This is a miserable jobs report,” he said, “there’s no spinning it any other way.”

Mr. Davis played a key role in a behind-the-scenes effort over the past two years to remake Twitter’s culture. But he repeatedly clashed with employees because of his blunt style. His treatment of workers was also the subject of several investigations by Twitter’s employee relations department and of complaints to Mr. Dorsey that too many people were leaving.

Mr. Davis and Mr. Montano will remain advisers to Twitter during the first quarter of 2022, according to the regulatory filing.

Mr. Dorsey, Mr. Davis and Mr. Montano are not the only executives who have recently announced plans to leave Twitter. The company’s head of people, Jennifer Christie, also announced that she would leave by the end of the year, according to two people familiar with the announcement who were not authorized to speak publicly.

The product and engineering teams within Twitter will be consolidated under three executives, a Twitter spokeswoman said.

Kayvon Beykpour will manage all consumer products, including design and research for those products. Revenue products, including designers and researchers, will be overseen by Bruce Falck. And Nick Caldwell will manage the technical infrastructure on which Twitter runs, overseeing data science and back-end engineering.

Twitter announced in February that it aimed to double revenue and add 123 million more active users by 2023, and the company hopes that consolidating Twitter’s teams under a handful of leaders will help it execute on its plans more quickly, a spokeswoman said.

Treasury Secretary Janet L. Yellen warned lawmakers in November that the United States could be unable to pay its bills soon after Dec. 15.

During testimony before the Senate Banking Committee this week, she underscored the urgency of the matter.

“I cannot overstate how critical it is that Congress address this issue,” Ms. Yellen said. “America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery.”

After approaching the first default in American history, Congress in October raised the statutory debt limit by $480 billion, an amount the Treasury Department estimated would allow the government to continue borrowing through early December.

The Bipartisan Policy Center said that there is additional uncertainty surrounding the debt limit this year because of the pandemic and the various economic relief programs that are still ongoing.

Dec. 15 is particularly important because the Treasury Department is required to make a $118 billion payment to the Highway Trust Fund. If corporate tax receipts that are due that day come in weak, Treasury could face a cash crunch and the United States would be unable to fully meet all of its obligations like paying out Social Security and funding military paychecks.

The Congressional Budget Office said earlier this week that it expected that Treasury might run out of cash by the end of December if Congress fails to act. The C.B.O. suggested, however, that Treasury might be able to defer some Highway Trust Fund payments, which were mandated in the recently passed infrastructure law, potentially staving off a default until sometime in January.

In April, the Biden administration said that Taiwan, Vietnam and Switzerland met the criteria to be considered currency manipulators but that it was not going to formally apply the label, noting extraordinary economic conditions brought on by the pandemic. The United States reached an agreement with Vietnam in July to address currency concerns, and the Treasury Department said on Friday that it was continuing to manage its progress and to negotiate with Taiwan and Switzerland.

The Treasury Department said that it would closely monitor the foreign exchange activities of China’s state-owned banks. A Treasury official said that the United States has raised concerns with Chinese officials about how these institutions intervene in currency markets.

“China’s lack of transparency and use of a wide array of tools complicate Treasury’s ability to assess the degree to which official actions are designed to impact the exchange rate,” the report said.

The United States placed China, Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, Mexico and Switzerland on its “monitoring list” of trading partners whose currency practices warrant close attention.

Low redemptions, though, don’t guarantee a smooth first day of trading. Grab’s stock closed Thursday down 21 percent, which may be partly because Grab structured its deal to allow most employees, aside from senior executives, to sell their shares. (Altimeter’s chief executive, Brad Gerstner, has called employee share lockups “one of the most insidious things” about the traditional I.P.O. process.) There was also heavy interest from short-sellers in the stock.

The proliferation of SPACs, alongside a hot market for traditional initial public offerings, has made 2021 the first year since 1997 that the number of public companies has increased, according to Bank of America. This follows years of worries that regulation made it too onerous to become a public company, leading start-ups to stay private for longer and depriving retail investors of the chance to buy into promising firms. SPACs have made it easier and faster for companies to go public, but recent trends might lead some to question whether it was worth it.

Shell’s decision to decline to invest in developing Cambo is a serious blow to the project. Siccar Point Energy, a private equity-backed firm that is Cambo’s main owner and developer, said that while “disappointed” by Shell’s decision, it remained “confident about the qualities” of the project, saying it would create 1,000 jobs.

Siccar Point has said that it plans to invest $2.6 billion in Cambo and that it has already spent $190 million in the four years since it acquired the rights to the field, which was discovered in 2002.

The oil industry argues that as long as Britain consumes more oil and natural gas than it produces, it is preferable for those fuels to come from the North Sea, where emissions regulations can be set, instead of from places with potentially fewer controls.

The environmental group Greenpeace UK said letting Cambo go ahead “would be a disaster for our climate and would leave the U.K. consumer vulnerable to volatile fossil fuel markets.”