Stocks tumble as Ukraine war overshadows robust jobs report

U.S. stocks racked up more losses Friday as concerns about Russia's invasion of Ukraine drowned out a report showing robust hiring in the U.S. last month.

The S&P 500 fell 0.8% to close 4,3287 as the conflict in Eastern Europe took a perilous turn. Russian President Vladimir Putin's forces on Friday were accused of shelling a huge nuclear power plant before taking control of the facility. A fire at Europe's largest nuclear plant caused by the shelling raised worries about what's next. 

Russia blamed Ukraine for the fire, calling it a "monstrous provocation," but the U.S. Embassy in Kyiv accused Russian President Vladimir Putin of "a war crime" with what it said was the "shelling of Europe's largest nuclear plant."

Such concerns helped drag the Dow Jones Industrial Average down 180 points, or 0.5%, to 33,614. The Nasdaq composite fell nearly 2%.

More than 60% of stocks in the benchmark S&P 500 fell on the day, with technology and financial companies weighing down the index the most. Apple fell 2% and JPMorgan Chase slid 3.9%. Among the gainers were utilities, health care stocks and companies that can benefit from higher oil prices. Occidental Petroleum vaulted 16.7% for the biggest gain in the index. 

Treasury yields sank again as investors moved money into U.S. government bonds in search of safety, and a measure of nervousness on Wall Street climbed.

"Fantastic" jobs report

All the movements came despite a much stronger report on U.S. jobs than economists expected, one described as encouraging and even "fantastic." Hiring by employers last month topped expectations by hundreds of thousands of workers, more people came back into the workforce after sitting on the sidelines and jobs numbers for prior months were revised higher.

On the inflation front, growth in wages for workers was slower last month than economists expected. While that's discouraging for workers hoping to keep up with rising prices at the grocery store, for economists and investors, it means less risk the economy may be headed for what's called a "wage-price spiral." In such a reinforcing cycle, higher wages for workers would cause companies to raise their own prices even higher.

"The COVID recovery was in full bloom in the jobs report," said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

"The tricky part is the future, not the past," he said, as U.S. crude oil prices climbed above $114 per barrel amid worries about pressure on supplies because of the Ukrainian war. "Higher fuel and food costs can eat into consumers' budgets. Those high costs can be a boon for oil producers and farmers, but not for everyone else."

The price of U.S. oil rose 6.2% to $114.37 barrel. Brent crude, the international standard, climbed 5.3% to $116.14 per barrel.  

Rising oil costs pushed the national average price of gas to $3.78 a gallon, a trend experts say is unlikely to ease anytime soon as Russia's war with Ukraine intensifies.

"Other than oil prices, the war in Ukraine won't have any major impact on U.S. price inflation," Paul Ashworth, chief U.S. economist at Capital Economics, said in a report. "As for food prices, the extreme drought on the West Coast and in parts of the South is still a bigger factor for domestic prices than events in Ukraine."

Amid the rush to safety, the yield on the 10-year Treasury fell to 1.73% from 1.84% late Thursday, a big move. It's well below the 2% level it had reached last month, as expectations built for upcoming hikes in interest rates by the Federal Reserve to rein in inflation.

Stocks had rallied in the middle of the week after Federal Reserve Chair Jerome Powell said he favored a more modest increase to interest rates later this month than some investors had feared. The Fed is set to raise rates for the first time since 2018, though it has a tightrope walk ahead because too-high rates can choke the economy and cause a recession.

Powell warned Thursday that the fighting in Ukraine is likely to further magnify the high inflation troubling world economies. Russia is a key oil producer and prices have been rising as global supplies are threatened by the conflict.