Stocks in retreat after NFP miss

Friday has seen stock markets fall back once again, led by tech and small cap stocks, as virus fears and post-NFP disappointment drag equities lower.

• Stock markets fall back in final session of the week
• NFP miss and weaker wage growth combine with virus worries
• Oil bounce stalls now that OPEC+ is out of the way

The week is ending on a sour note for equities, which remain in thrall to the potential spread of the Omicron variant, and are also sulking in the wake of a poor NFP figure. Hopes of another 500K+ month of job creation were dashed, and while the unemployment rate dropped, a slower pace of wage increases has contributed to a general move out of risk assets. Growth fears are taking centre stage across markets, as a slowing recovery threatens to put more pressure on stocks after a strong year for the headline indices. Until the extent of the hit from Omicron becomes clearer it looks like we have more downside to come in indices, with intraday bounces being sold. For investors who had expected a steady climb in December, this will come as a rude surprise, but with the Vix still at an elevated level dramatic moves in equities remain the norm. This is still quite the change from earlier in the year, and is somewhat reminiscent of the  volatility of early 2020, although in a much milder form for now. 

Expectations of tighter Fed policy mean that the dollar remains well-supported, giving investors another reason to be cautious about buying the dip in stocks. Some of the shine has come off crude prices too, as the post-OPEC+ bounce fades. Now traders in the commodity can go back to fretting about economic growth and demand, and whether both these elements can recover sufficiently to provide the foundation for further gains in the price.