US open: Stocks fall at the bell as jobs report calls rate cuts into question

US stocks opened lower on Friday following a stronger than expected uptick in hiring last month, calling into question the likelihood of interest rate cuts by the Federal Reserve.

At 1510 BST, the Dow Jones Industrial Average was down 0.53% at 26,823.82, while the S&P 500 was 0.68% lower at 2,975.40 and the Nasdaq traded 0.73% weaker at 8,110.93.

The Dow dropped 142 points at the open as market focus was almost solely focussed on Friday's strong non-farm payrolls report and unemployment data.

Hiring in the US picked up in June at a greater than expected rate of 224,000, leading some economists to question whether the US Federal Reserve will cut short-term official interest rates when it next meets on 30-31 July.

The figure came in well ahead of the rise of 158,000 forecast by economists, following a downwardly revised gain of 72,000 during May, and an average 183,000 increase over the previous three-month stretch.

In parallel, according to the Department of Labor, the US jobless rate ticked higher by a tenth of a percentage point from the month before to reach 3.7%, but mainly because the labour force participation rate also rose by a tenth of a point to 62.9%.

Following Friday's jobs data, the yield on the benchmark two-year US Treasury note was racing higher by seven basis points to 1.83%, versus a session high of 1.85% and 2.55% one year ago.

Last month, the central bank opened itself up to the possibility of easing monetary policy, stating it would "act as appropriate" to maintain the current economic expansion.

While investors were betting heavily on rate cuts ahead of the session, the report tempered expectations for aggressive monetary policy. With expectations for a 50 basis-point rate cut falling to just 9% from 29%, while expectations for a cut of 25 basis points, however, rose to 91% from 70.8%.

Elsewhere, geopolitical tensions in the Middle East were again in focus after the British Royal Marines claimed a large Iranian oil tanker on Thursday after it was caught attempting to take oil to Syria, in violation of EU sanctions.

Oil prices were up in early trade, with West Texas Intermediate ahead 0.35% at $57.54 a barrel, while Brent Crude was trading 1.63% firmer at $64.33 per barrel.

On the corporate front, Samsung warned investors that its second-quarter earnings looked set to fell 56% year-on-year basis, citing weak demand for memory chips - putting pressure on US semiconductor stocks such as Qualcomm and Broadcom, which fell 1.55% and 1.4%, respectively.