Dow drops 100 points and Wall Street pulls back from the post-election rally as employment growth slows and Biden moves closer to the White House
- The major US stock indices fell on Friday after rising after the elections
- Stocks had rallied on the prospect of a divided administration in Washington
- However, the latest employment figures showed a slowdown in employment growth over the past month
- Investors are eagerly awaiting another round of stimulus from Congress
US stock indices plummeted on Friday after a post-election rally as new data showed employment growth slowed and Democrat Joe Biden got closer to winning the presidency.
The Dow Jones Industrial Average was down more than 100 points in morning trade before closing the session, falling 66.78 points, or 0.2 percent, to 28,323.40.
At the closing bell, the S&P 500 was roughly flat, falling 1.01 points or less than 0.1 percent, and the Nasdaq rising 4.30 points or less than 0.1 percent.
Employment data followed, showing employers created 638,000 new jobs in the last month – more than economists expected, but representing a further slowdown in monthly employment growth.
A US flag can be seen on the New York Stock Exchange in Manhattan on Thursday. US stock indices fell on Friday after a post-election rally
The unemployment rate fell from 7.9 percent in September to 6.9 percent, said the Ministry of Labor in its closely monitored employment report on Friday. The rate has fallen from a high of 14.7 percent in April
Investors were buoyed by the election results, which so far have nearly eliminated the prospect of a "blue wave" in which Democrats would control both the White House and Congress and increase the chances of backing pro-business policies.
Democrat Joe Biden appears to be nearing the presidency, with votes still being counted in several key states, but Republicans held onto several seats in the Senate that were seen as vulnerable.
The positive for the markets is that a deadlock may prevent the Democrats from approving some of the measures feared by investors, such as higher tax rates and tighter antitrust policies for big tech companies.
The downside of a split government is that a still split Washington makes any package of economic support from Congress less generous than if the Democrats had sweeped the elections.
Investors and economists say the economy needs such stimulus, especially as the country's new coronavirus cases break records again. Europe is also facing a worrying surge in infections, and governments there have already rolled back restrictions on businesses in hopes of slowing the spread.
Your browser does not support iframes.
The Dow opened roughly flat on Friday before losing more than 100 points in morning trade
The number of non-agricultural workers rose by 638,000 jobs last month, the Ministry of Labor said in its closely monitored employment report on Friday. The increase in October was slightly below the 672,000 jobs added in September
Even if the toughest lockdowns in the US don't return, concerns remain that the worsening pandemic will scare consumers themselves and wipe out profits for businesses.
Another risk to the market is a controversial presidential election. Markets see cause for optimism if either Biden or President Donald Trump wins, and what investors want more than anything is for a clear winner to emerge.
Biden appears to be nearing the necessary votes to win the presidency, but Trump went into the White House briefing room Thursday night to make a litany of allegations with no evidence of how Democrats wrongly tried to take a second off his term .
His campaign has raised legal objections in several states, though most are small and don't seem to sway many votes. If the election drags on through legal challenges, the resulting rise in uncertainty could cause stocks to spin, according to analysts.
The 10-year Treasury yield rose to 0.82 percent from 0.78 percent late Thursday according to the new employment data.
The rally helped the Treasury Department's 10-year return regain some of its recent decline. Earlier this week it had been over 0.90 percent as expectations rose that a democratic sweep in Tuesday's elections could open the door to big stimulus for the economy.