NEW YORK — (CNN) There’s no sugarcoating it.
The September jobs report was not good.
And it’s adding to the considerable amount of apprehension that investors have about the global economy and financial markets.
The Dow Jones Industrial Average, S&P 500 and Nasdaq all fell more than 1.5% in early morning trading Friday.
Prior to the release of the report, stock market futures were pointing to a modestly higher open.
The weak jobs report has some experts wondering if the Federal Reserve will now hold off on an interest rate hike until next year.
Along those lines, bank stocks were among the biggest losers Friday morning. The SPDR S&P Regional Banking exchange-traded fund plunged 4%.
Low rates have hurt profit margins at many banks since it’s tougher to make money on loans when short-term rates are near zero.
And government bond yields fell as well. That’s another sign that investors are more nervous about the health of the economy and feel that the Fed may keep rates near zero for even longer.
The rate on the benchmark 10-year U.S. Treasury note dipped below 2% for the first time since the market panic of August 24.
Bond yields fall as prices rise. Traders tend to buy more bonds when they are worried about the economy. Bonds are viewed as a safer alternative to much riskier stocks.
Gold, which often does well when investors are nervous, shot up nearly 2% Friday morning.
CNNMoney’s Fear & Greed Index, which measures seven gauges of investor sentiment, fell further into Extreme Fear Territory. And the VIX, a market volatility gauge that is one of the components of the Fear & Greed Index, shot up 8%.
It”s understandable why investors are on edge.
Stocks just suffered their worst quarter in four years, largely due to worries about market turmoil in China and concerns that the Chinese economy was slowing at a much more dramatic pace than thought.
In fact, the Fed cited global volatility as a main reason why it did not raise interest rates last month.
But many market bulls had maintained that China’s woes would not hurt the U.S. and jobs growth remained strong, was the argument of the optimists.
The disappointing jobs report now calls into question the strength of the U.S. economy.
The Fed may now need to push off plans for a rate hike until early 2016 unless the jobs numbers for October and November show healthier job gains and a stronger pickup in wage growth.
Even though the market usually cheers news that suggests the Fed will keep rates low, there is now a sense that rates have been near zero for too long.
The Fed slashed rates to zero in December 2008 — the height of the credit crisis and Great Recession.
This would be the first rate hike in nine years, and an important symbolic sign. It could show the Fed’s confidence in the U.S. economy.
But all of a sudden, investors have to wonder if there are more reasons to be optimistic than pessimistic about the economy and job market.
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