Wall St set to open lower as jobs growth boosts rate hike bets By Reuters

By Shreyashi Sanyal and Ankika Biswas

(Reuters) – Wall Street was set to open sharply lower on Friday as solid job growth and a drop in the unemployment rate last month pointed to a tight labor market, giving more room for the Federal Reserve to stick to big-sized interest-rate hikes.

The Labor Department’s closely watched employment report showed nonfarm payrolls increased by 263,000 jobs last month after rising 315,000 in August.

The report also showed the jobless rate fell to 3.5% in September, lower than expectations of 3.7%. Traders now see a 89.8% chance of 75 basis-point hike by the Fed, up from 83.4% before data.

Aggressive rise in borrowing costs have stoked fears of slowing economic growth and a hit to corporate profits, but with the labor market remaining tight, the Fed was likely to continue with its monetary tightening plan.

“The markets are worried that the Fed is going to rely on information like this that’s really a month old and they’re going to overshoot and kill the economy,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Investors don’t have confidence in a soft landing because the Fed continues to have to ramp higher and higher to begin to slow the economy down.”

Meanwhile, losses in chipmakers after a revenue warning from Advanced Micro Devices (NASDAQ:) Inc weighed on the indexes as it signaling the chip slump could be much worse than expected.

AMD fell 6.1% in premarket trading as its third-quarter revenue estimates were about a billion dollars less than previously forecast.

Other chipmakers Qualcomm (NASDAQ:) Inc, Intel Corp (NASDAQ:), ON Semiconductors, Lam Research (NASDAQ:), and Nvidia (NASDAQ:) Corp shed between 3.3% and 3.9%.

At 08:51 a.m. ET, were down 322 points, or 1.07%, were down 52.75 points, or 1.4%, and were down 216.5 points, or 1.88%.

All three main Wall Street indexes are still set to snap a three-week losing streak, heading for their biggest weekly gain since late June.

With the benchmark rising to 3.9038%, most rate-sensitive technology and growth stocks such as Alphabet (NASDAQ:) Inc, Amazon.com (NASDAQ:), Apple Inc (NASDAQ:), Microsoft Corp (NASDAQ:) fell between 1.7% and 2.4%. [US/]

With most Fed officials supporting the need for rapid rate hikes, investors will monitor comments from New York President John Williams, Minneapolis President Neel Kashkari, and Atlanta President Raphael Bostic for any slight deviation in narrative.