Jobs report points to further US rate rises: Semiconductor sector hit hardest

Market Reports

by Lauren Hayes

Stocks fell Friday as traders evaluated September’s jobs report, which showed the unemployment rate continuing to decline and sparked an increase in interest rates concern.

The US economy added 263,000 jobs in September, slightly below a Dow Jones estimate of 275,000, the government said Friday. However, the unemployment rate came in at 3.5 per cent, down from the 3.7 per cent in the previous month in a sign that the jobs picture continues to strengthen even as the Federal Reserve tries to slow the economy with rate hikes to stem inflation.

The benchmark 10-year Treasury added 6 basis points to 3.883 per cent. It has seen a volatile couple of weeks, falling below 3.6 per cent briefly earlier in the week after surpassing the 4 per cent mark last week. The focus will now shift to the September CPI numbers per cent September Fed Open Market Committee minutes.

The Dow Jones Industrial Average fell 630.15 points, or 2.1 per cent, to 29,296.79. The S&P 500 lost 2.8 per cent to 3,639.66. The Nasdaq Composite slid 3.8 per cent to 10,652.41, which is less than 1 per cent above its low of the year.

For the week, the Dow rose 2 per cent, while the S&P added 1.5 per cent. The Nasdaq eked out a 0.7 per cent gain.

Across the sectors, oil and gas stocks outperformed as oil rose about 3 per cent to a five-week high on Friday, carried higher again by an OPEC+ decision this week to make its largest supply cut since 2020.

Helping drive equities lower on Friday was a drop in semiconductor stocks following an announcement from the White House that it will implement export controls that limit China’s access to US semiconductors. 

Semiconductor stocks are the most cyclical part of the technology world because of the boom-and-bust nature of chip demand. This year the industry has gone from a worldwide shortage of chips to a glut in a matter of months . With recent tensions between the US and China, and with new investments in US manufacturing this could see the imbalance in supply and demand worsen rather than improve.

Advanced Micro Devices’ stock tumbled 14 per cent after the chipmaker warned its third-quarter revenue would be lower than anticipated. Shares in other semiconductor groups also fell, with Qualcomm down more than 3 per cent and Nvidia down 8 per cent.

Wall Street banks have slashed their expectations for third-quarter earnings of big US companies by $34bn over the past three months. 

Analysts are expecting companies on the S&P 500 to post earnings-per-share growth of 2.6 per cent in the July to September quarter. That figure has fallen from 9.8 per cent at the start of July, and if accurate would mark the weakest quarter since the July to September period in 2020, when the economy was still reeling from coronavirus lockdowns. Although the fall across the markets has meant that earnings revisions are being priced in from a valuation perspective. 


One Australian dollar is relatively flat to the US dollar on Friday, buying 64.02 US cents.


Gold lost $11.50 or 0.7 per cent to US$1709 an ounce.

Silver fell $0.40 or almost 2 per cent to US$20.26 an ounce.

Copper dropped $5.95 or 1.7 per cent to US$338.65 a pound.

Oil gained $4.19 or 4.7 per cent to US$92.64 a barrel.


The SPI futures are pointing to a 0.9 per cent fall.
Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell 1.2 per cent, Frankfurt lost 1.6 per cent while London’s FTSE closed 0.1 per cent lower.

In Asian markets, Tokyo’s Nikkei lost 0.7 per cent, Hong Kong’s Hang Seng fell 1.5 per cent while China’s Shanghai Composite was closed.

On Friday, the Australian share market lost 0.8 per cent to close at 6763 points.

Dividends payable

Adacel Technologies Ltd (ASX:ADA)
EQT Holdings Ltd (ASX:EQT)
Orora Ltd (ASX:ORA)
Saunders International Ltd (ASX:SND)
Sequoia Financial Group Ltd (ASX:SEQ)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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