(Bloomberg) -- The S&P 500 Index extended its longest losing streak in more than three decades, as data bolstered speculation interest rates will rise before year-end and investors remained wary before the looming presidential election.
Equities faded in afternoon trading as declines among consumer, financial and energy shares overshadowed gains in drugmakers. Procter & Gamble Co. and Amazon.com Inc. were among the biggest drags, sinking more than 1.5 percent. Insurer Willis Towers Watson Plc tumbled 5.6 percent after cutting its full-year revenue forecast, and Wells Fargo & Co. lost 1.6 percent. Crude’s biggest weekly drop since January weighed on oil and gas producers.
The S&P 500 fell 0.2 percent to 2,085.18 at 4 p.m. in New York, after erasing a 0.5 percent advance. The gauge has retreated 3.1 percent over nine days, the longest since 1980 when it dropped 9.4 percent. The Dow Jones Industrial Average lost 42.39 points, or 0.2 percent, to 17,888.28, and the Nasdaq Composite Index declined 0.2 percent. The CBOE Volatility Index rose for a ninth session, the longest ever. About 7.3 billion shares traded hands on U.S. exchanges, 12 percent more than the three-month average.
“The jobs number should increase rate-hike odds and push up the dollar further, but nothing is happening in the markets ahead of the election,” said Dennis Debusschere, a senior managing director and global portfolio strategist at Evercore ISI in New York. “All expectations of the rate outlook and by extension the markets are being muted by election uncertainty.”
A report today showed payrolls climbed by 161,000 last month following a 191,000 gain in September that was larger than previously estimated. Wages rose from a year earlier by the most since 2009, and the jobless rate fell to 4.9 percent. The figures are likely to keep the Federal Reserve on track to raise borrowing costs next month for the first time in 2016.
While shares have almost always risen in the days before a presidential election, anxiety about the outcome of the Nov. 8 vote has weighed on stocks, overshadowing even a Fed meeting earlier this week. The S&P 500 fell Friday as low as 2,083, its average price during the past 200 days, and a technical level it hasn’t breached since the rout that followed the U.K.’s June vote to leave the European Union.
The main U.S. equity benchmark posted a fourth weekly decline in the last five, down 1.9 percent as polls showed a dwindling lead for Democratic presidential candidate Hillary Clinton. Republican nominee Donald Trump showed strength in Iowa and Ohio pre-Election Day voting, while Clinton’s advantage in early balloting looked favorable in North Carolina and Nevada, according to a Bloomberg Politics analysis.
The tightening race sent the CBOE Volatility Index surging 73 percent during the past two weeks, and dragged the S&P 500 to a four-month low. The measure of market turbulence known as the VIX reversed an earlier decline Friday as it rose 2 percent to 22.51, the highest since the Brexit aftermath.
“The U.S. elections are the elephant in the room for markets at the moment,” said Christian Gatticker, Zurich-based head of research at Julius Baer Group Ltd. “The best case is gridlock where Hillary wins and works with a Republican Congress, while a worst case is a hung vote.”
Hedge fund manager Dan Loeb said he’s cutting risk in his portfolio ahead of the vote on concern that surprises could rattle financial markets. “We’ve reduced our exposures, we’ve cut some positions and increased some hedges,” Loeb said Friday in a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based insurer where he oversees investments. “And it isn’t just about the president. Obviously who wins is going to impact the market. I think equally important is what happens in the House and Senate.”
Before today’s payrolls report and the approaching election, the Fed on Wednesday kept rates unchanged in a widely expected move, and indicated the argument for raising them has strengthened. Other data this week was mixed, with modest expansion in manufacturing last month, while services industries growth slowed. Traders are pricing in a 74 percent chance the central bank will act in December, up from 69 percent a week ago.
“It’s worth noting that unemployment is the single best determining factor of market direction,” said Ross Yarrow, director of U.S. Equities at Robert W. Baird & Co. In London. “The S&P 500 almost never peaks for the cycle until unemployment troughs.”
Traders are also parsing corporate results as the earnings season winds down. More than four out of five S&P 500 companies have reported so far, with 56 percent beating sales estimates and 75 percent topping profit forecasts. Analyst predict earnings for members of the index grew 2.5 percent in the July-September period, snapping a five-quarter stretch of declines.
Among shares moving on earnings news, NRG Energy Inc. surged the most since December, after raising profit guidance for 2016. Mohawk Industries Inc. jumped 7.8 percent to its best one-day gain in five years after the flooring maker’s results topped estimates.
Fluor Corp. sustained its steepest drop since 2008 after cutting its profit forecast because of a delayed construction project, and its earnings target for next year fell short of analysts’ expectations. Symantec Corp. slumped to a 2 1/2-month low after its current quarter sales and profit outlooks missed predictions and the chief financial officer stepped down.