U.S. stocks slip, Treasury yields rise and dollar rallies after robust U.S. jobs report
(Updates to late afternoon)
By Stephen Culp
NEW YORK, Aug 5 (Reuters) - The S&P 500 headed lower, Treasury yields rose and the dollar rallied on Friday after the U.S. July employment report blasted past expectations, raising the odds of continued monetary tightening from the Federal Reserve.
Nasdaq joined the bellwether index in the red, while benchmark U.S. Treasury yields and oil prices headed higher as the stronger-than-expected payrolls data appeared to confirm the economy is not yet in recession. That increased the likelihood of more aggressive rate increases from the Fed in September.
The Labor Department's employment report showed the U.S. economy added 528,000 jobs in July, more than double the 250,000 expected, while wage inflation remained hot and the participation rate edged lower.
"The market’s initial reaction was negative, based on the concern that the Fed may have to raise (interest) rates more going forward," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.
"That has evolved throughout the day and now we’re seeing the view that increased employment is beneficial to the economy," Ghriskey added. "And while the Fed will have to continue its hawkish policy, the economy will be able to stay out of recession."
The Dow Jones Industrial Average .DJI rose 8.39 points, or 0.03%, to 32,735.21, the S&P 500 .SPX lost 17.28 points, or 0.42%, to 4,134.66 and the Nasdaq Composite .IXIC dropped 103.44 points, or 0.81%, to 12,617.14.
European shares fell after the U.S. jobs data fueled expectations for a 75 basis point rate hike at the Federal Reserve's September meeting.
The pan-European STOXX 600 index .STOXX lost 0.76% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.37%.
Emerging market stocks rose 0.73%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.6% higher.
U.S. Treasury yields rose and a closely watched part of the yield curve touched its deepest inversion since August 2000 on increased odds of another 75 basis point interest rate hike from the Fed in September.
Benchmark 10-year notes US10YT=RR last fell 44/32 in price to yield 2.836%, from 2.676% late on Thursday.
The 30-year bond US30YT=RR last fell 63/32 in price to yield 3.0629%, from 2.961% late on Thursday.
The dollar rallied against a basket of currencies in the wake of the employment report.
The dollar index .DXY rose 0.85%, with the euro EUR= down 0.61% to $1.0181.
The Japanese yen weakened 1.57% versus the greenback at 135.03 per dollar, while sterling GBP= was last trading at $1.207, down 0.72% on the day.
While the strong labor data helped crude prices advance, they remained on course to end the week near multi-month lows due to lingering recession fears.
U.S. crude CLcv1 rose 0.53% to settle at $89.01 per barrel, while Brent LCOcv1 settled at $94.92 per barrel, up 0.85% on the day.
Gold dipped as waning recession fears tarnished the safe-haven metal's luster.
Spot gold XAU= dropped 1.0% to $1,773.48 an ounce.
Global FX performance Link
Global asset performance Link
Reporting by Stephen Culp; additional reporting by Elizabeth
Howcroft in London; Editing by Susan Fenton and Chizu Nomiyama
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.