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By Mark DeCambre, MarketWatch , Chris Matthews

Slowing job gains may reinforce view of a less-aggressive Fed

U.S. stocks turned negative late-morning Friday, after trading modestly higher at the start of trade, as new jitters on trade relations overshadowed a November employment report.

How are the benchmarks performing?

The Dow Jones Industrial Average fell 237 points, or 1%, at 24,711, the S&P 500 index is down 21 points, or 0.8%, at 2,674, while the Nasdaq Composite Index traded 86 points, or 1.3%, lower at 7,095.

Check out:A death cross for the S&P 500 highlights a stock market in tatters (http://www.marketwatch.com/story/a-looming-death-cross-for-the-sp-500-highlights-a-stock-market-in-tatters-2018-12-06)

For the week, the Dow, S&P 500 and Nasdaq are set to show declines of more than 3%.

Read:The Dow just slashed a 785-point plunge, marking its most stunning reversal since March (http://www.marketwatch.com/story/the-dow-just-slashed-a-785-point-plunge-marking-its-most-stunning-reversal-since-march-2018-12-06)

Late Monday morning, both the S&P 500 and the Dow were threatening to move into negative territory for the year, while the Nasdaq is clinging to a 3% advance year-to-date

What's driving the market?

The U.S. economy added 155,000 new jobs in November (http://www.marketwatch.com/story/us-gains-155000-jobs-in-november-and-unemployment-rate-stays-at-37-2018-12-07), the Labor Department estimated Friday morning, below expectations of 190,000 new jobs, per a MarketWatch poll of economists.

The jobs report also showed the unemployment rate holding steady at 3.7%, as expected. Average hourly earnings grew at 6 cents per hour from October, or 0.2%, just shy of expectations, and grew by 3.1% year-over-year, their highest rate since 2009.

The jobs numbers are of particular importance to investors, as these data will inform The Federal Reserve's interest-rate-setting committee, the FOMC, as it prepares to decide whether to raise interest rates at its coming meeting Dec. 18-19.

Signs that the FOMC may take a less aggressive tack in normalizing rates have increased, with The Wall Street Journal on Thursday reporting that Fed officials are considering a new wait-and-see mentality (https://www.wsj.com/articles/restrained-inflation-reduces-urgency-for-quarterly-rate-increase-pattern-1544127856?mod=searchresults&page=1&pos=1) at that December meeting.

Expectations for a December interest-rate increase are showing a 76.6% probability, down from 83% a week ago, according to CME Group data, with expectations increasing that policy makers may cool the rate-hike path in 2019.

The jobs data come after a frenetic session that had been colored by fears of intensifying trade battles between the U.S. and China. That was after the arrest in Canada of a top Chinese tech executive at China telecommunications giant Huawei Technologies, which amplified worries in a market already skittish about relations between Beijing and Washington on tariffs and intellectual-property rights.

Read:Huawei arrest creates concerns in Silicon Valley as well as abroad (http://www.marketwatch.com/story/huawei-arrest-creates-concerns-in-silicon-valley-as-well-as-abroad-2018-12-06)

Those fears combined with a persistent drop in crude-oil prices have made investors particularly on edge, fretting that global economic growth is imperiled.

What are market participants saying

"The jobs report threaded the needle really well," J.J. Kinahan, chief market strategist with TD Ameritrade told MarketWatch, arguing that 150,000 new jobs is neither to high nor too low for investors.

"Had the this come in really hot, the market would have interpreted it as a number that would force the Fed to raise rates not just in December, but in March too," he said. "You also didn't want to miss in a huge way on the down side, as it would have shaken faith in the economy," he said.

Steve Chiavarone, portfolio manager at Federated Investors told MarketWatch, told MarketWatch that while the jobs report was bullish, trade concerns will continue to weigh on the market in the short term.

On this top of his list of concerns is a recent decline in capex spending that he says "is absolutely related to trade."

"Companies can't plan their global supply chains, with so much uncertainty over where policy is going, and if you can't plan, you can't invest," Chiavarone said. This dynamic will hurt the U.S. economy, productivity growth and equity values if China and the U.S. cannot come to some agreement that provides certainty around the new rules of trade.

Which stocks are in focus?

Shares of Big Lots Inc.(BIG) are trading down more than 22%, after wider-than-expected third-quarter loss.

Shares of Broadcom Inc. (AVGO) are in focus after the chip maker announced fiscal fourth-quarter profits and sales Thursday evening that topped Wall Street expectations. The stock is up 1.8% Friday morning.

Ulta Beauty Inc. (ULTA) shares are down 8.4% in early trade Friday, after a Thursday evening earnings release that predicted weaker holiday sales that analysts hoped.

Shares of Altria Group (MO)are in focus after the company announced it would take a 45% ownership stake in the cannabis-firm Cronos Group Inc. (CRON.T), worth $1.8 billion. The stock is up 1.3%, while Cronos shares are surging more than 21% on the news.

What other data and Fed speakers are ahead?

How are other markets trading?

Asian markets traded mostly higher Friday (http://www.marketwatch.com/story/asian-markets-inch-forward-amid-us-china-friction-2018-12-06), with the Nikkei 225 rising 0.8% and markets in South Korea and Australia advancing on the day. The Shanghai Composite Index was virtually flat, with gains of less than 0.1%.

European markets were also trading higher Friday, with both the Stoxx Europe 600 and the FTSE 100 in the green.

Crude oil is rising 4.3% Friday (http://www.marketwatch.com/story/oil-prices-are-up-modestly-as-saudis-still-skeptical-of-opec-coalition-cuts-2018-12-07), while gold is advancing 0.6% and the U.S. dollar edged 0.1% lower.

(END) Dow Jones Newswires

December 07, 2018 11:04 ET (16:04 GMT)

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