<ul>
<li>All three major U.S. stock indexes down &gt;1%</li>
<li>Financials lead S&amp;P 500 sector decliners; energy only gainer</li>
<li>European shares down ~1.4%</li>
<li>US oil surges more nearly 10%; gold up &gt;1%; dollar gains; bitcoin down almost 4%</li>
<li>US 10-yr Treasury yield up at 4.15% Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at</li>
</ul>
<h3>DATA DOWNER: PAYROLLS PLUNGE, UNEMPLOYMENT RISES, RETAIL SALES SOFTEN</h3>
Investors hoping for some relief from the anxieties of war found no comfort in Friday’s disappointing economic data. The February employment report delivered a string of downside surprises, offering stark vindication of those who warned that the labor market is softening.
In fact, there are virtually no signs in this report that the employment picture is headed anywhere but south.
The U.S. economy unexpectedly lost 92,000 jobs in February (USNFAR=ECI) , reversing much of January’s downwardly revised 126,000 job adds, and defying expectations for a 59,000 payrolls increase.
Following the Labor Department’s sharp downward revisions to 2025 data, this report marks the fifth month of the last twelve in which the U.S. economy shed jobs. Over the last year, the topline number has landed below expectations ten out of twelve times.
“The labor market is coming to a standstill,” writes Jeffrey Roach, chief economist at LPL Financial. “Looking ahead, we should expect the unemployment rate to rise.”
“I don’t expect the Fed to act sooner than June, but if the labor market deteriorates faster than expected, officials could cut rates on April 29,” Roach adds.
Drilling below the surface, job losses in the services sector were responsible for about 71% of the 86,000 drop in private sector payrolls. Goods producers, construction, and manufacturing sectors all shed workers.
The report also gave markets their first glimpse at February inflation, showing average hourly wages rose by 0.4% on a monthly basis, a repeat of the January print and hotter than the 0.3% growth economists predicted.
Year-over-year, wages increased 3.8%, or 0.1 percentage point warmer than economists’ forecasts and increase over the prior month’s 3.7% annual wage growth figure.
The combination of a softening labor market and rising inflation, poses a quandary to the U.S. Federal Reserve, which is still largely seen leaving interest rates where they currently stand at the conclusion of its next policy meeting, scheduled later this month.
“The weak payrolls number and hot wage growth points to stagflation,” Peter Cardillo, chief market economist at Spartan Capital Securities tells Reuters. “If it’s not an aberration and it continues for another month or two, then a rate cut … is now back on the radar.”
The jobless rate (USUNR=ECI) also defied expectations by edging up to 4.4%, even as the labor market participation dipped to 62.0%, the lowest reading since December 2021.
That’s particularly worrisome. When folks leave the workforce they are no longer considered jobless, and the unemployment rate tends to creep lower. Not this time.
The average unemployment duration lengthened to 25.3 weeks from 22.4 weeks in January. This suggests it’s taking workers longer to find new gigs (a notion supported by this week’s rising continuing jobless claims data), which goes a long way toward explaining souring labor market confidence.
“The number of people out of work for more than 27 weeks increased by 86,000, reflecting the continued ‘low hire, low fire’ job market,” says David Royal, chief investment advisor at Thrivent. “Those out of work, as well as any new entrants to the labor force, are often struggling to find jobs.”
Shifting gears, receipts at U.S. retailers (USRSL=ECI) slipped by 0.2% in January, not quite as steep as the -0.3% consensus and a deterioration from December’s unchanged reading.
Looking under the hood of the Commerce Department’s retail sales report, a 6.0% drop in spending in the woebegone department store segment was mitigated by a 1.9% increase in non-store retail (which includes online shopping). Dollars spent at the gasoline pump decreased by 2.9%. In fact, stripping away gasoline retail sales actually increased by 0.1% in the first few months of the year. Autos/parts dropped 0.9%, while outlays at food/drink establishments, often viewed as a barometer of consumer sentiment, slipped 0.2%.
But in the day’s one faintly bright spot, the “control” figure, which excludes autos, gasoline, building supplies and food services - and is most closely correlated with the personal expenditures element of GDP - rose by 0.3%, nominally better than the 0.2% increase economists predicted.
The drop in gasoline receipts was “entirely due to a similar-sized decline in gas prices on the month, which has since unwound sharply amid the ongoing conflict in the Middle East,” writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, who adds that the control figure “provides some reassurance about the health of consumers, but the underlying trend in core sales still seems to be slowing gradually.”
(Stephen Culp)
FOR FRIDAY’S OTHER LIVE MARKETS POSTS: MORE SHARP DECLINES ON WALL STREET AFTER JOBS DATA CLICK HERE S&amp;P 500 E-MINIS DOWN MORE THAN 1% AS JOBS DATA ADDS TO WEEK’S WORRIES CLICK HERE HERE COME PAYROLLS, REMEMBER THEM? CLICK HERE STOXX SLIPS, ON TRACK FOR BIGGEST WEEKLY FALL SINCE APRIL 2025 CLICK HERE BOND MARKET MOVES GONE TOO FAR SAYS NATIXIS CLICK HERE RETAIL KEEPS BUYING BIG TECH CLICK HERE STOXX SLIPS, ON TRACK FOR BIGGEST WEEKLY FALL SINCE APRIL 2025 CLICK HERE EUROPE BEFORE THE BELL: FUTURES RISE CLICK HERE MIDDLE EAST TUMULT LEAVES MARKETS IN DISARRAY CLICK HERE
Early trading snapshot
<img src="https://imageproxy.pbkrs.com/https://fingfx.thomsonreuters.com/gfx/mkt/znvnmblqrpl/Pasted%20image%201772810615428.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="705" height="634" original-src="https://imageproxy.pbkrs.com/https://fingfx.thomsonreuters.com/gfx/mkt/znvnmblqrpl/Pasted%20image%201772810615428.png"/>
Nonfarm payrolls
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/klvylgqlqpg/nfpr.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="601" height="499" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/klvylgqlqpg/nfpr.png"/>
Inflation gauges
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/egvbeyjeopq/inflation.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="648" height="525" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/egvbeyjeopq/inflation.png"/>
Labor market participation and jobless rates
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/lbpgygjyopq/participation.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="599" height="376" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/lbpgygjyopq/participation.png"/>
Unemployment duration and jobs confidence
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/akpeyqeyzpr/UEduration.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="649" height="400" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/akpeyqeyzpr/UEduration.png"/>
Retail sales and retail stocks
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/zgvolbalwpd/retailsales.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="601" height="400" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/USA-STOCKS/zgvolbalwpd/retailsales.png"/>

513500

- All three major U.S. stock indexes fell over 1%, led by declines in the financial sector, while European shares dropped approximately 1.4%.  
- February's employment report revealed a loss of 92,000 jobs, increasing the unemployment rate to 4.4%, highlighting a softening labor market despite rising wages.  
- Retail sales dipped by 0.2% in January, with consumer spending showing signs of slowing down amid rising inflation concerns.

Reuters

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LIVE MARKETS-Data downer: Payrolls plunge, unemployment rises, retail sales soften