Faang Rout Is Reconsidered After Jobs Data: Wall Street Reacts

With hiring data far worse than economists expected, traders were piling back into the stay-at-home trade, erasing about half the drop in the Nasdaq 100 from the last three weeks.

Contracts on the tech-heavy index jumped more than 1% after data showed hiring rose by 266,000 last month, well short of the 1 million forecast. Treasury yields tumbled and gold rallied. Cathie Wood’s ARK Innovation ETF (ARKK) surged almost 3% in premarket trading, bouncing back from its worst stretch of losses since 2018.

Stay-at-home darlings battered all week amid rising concern that inflation was imminent staged a comeback, with Roku Inc. surging 11% while Zoom Video Communications Inc. added 1%. Peloton Interactive Inc. climbed 5%.

The report upended the inflation narrative that had taken hold on Wall Street. All of a sudden, the prospects for a Federal Reserve policy change diminished. Here’s what strategists and money managers were saying:

Faang Rout Is Reconsidered After Jobs Data: Wall Street Reacts

Ross Mayfield, investment strategy analyst at Robert W. Baird & Co.

That’s going to majorly pause the rotation and be a boon to tech stock. This is the kind of miss where you do have to reconsider the timeline of the recovery a little bit and that will have spillover effects into the stock market.

Larry Weiss, head of equity trading at Instinet LLC in New York

If the numbers truly represent a slower ‘return to normal’, then the stay-home trade should benefit for a while longer.

Arthur Hogan, chief market strategist at National Securities

This is going to reconfirm the Fed’s monetary policy condition. If there was any hint that perhaps they were going to start tapering, maybe even announce it at Jackson Hole, you can likely put that in the trash bin. The second thing is that rotation out of the stay-at-home stocks is likely stretched and may find some new sponsorship today.

Seema Shah, chief strategist at Principal Global Investors

The smaller rise in payrolls should at least assuage some concerns around the Fed policy outlook. As we have heard several times in recent days, even a very strong jobs number wouldn’t have caused the committee to formally discuss changing the pace of bond purchases, so today’s number certainly won’t begiving the Fed cause for concern. They will be in no rush to bring forward tapering plans.

Sameer Samana, Wells Fargo Investment Institute’s senior global market strategist

It was the most remarkable miss we’ve had in some time. Still, not going to read too much into it. Our takeaways would be, the labor market recovery will be uneven and stumble at times. It’s what the Fed has emphasized: that markets should be careful not to get too carried away by recent data. This recovery will be a marathon and not a sprint.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.