By Anora Mahmudova and Sara Sjolin, MarketWatch
Economy adds 295,000 jobs in February; unemployment rate at
5.5%
NEW YORK (MarketWatch) -- U.S. stocks sold off on Friday and
recorded a second straight week of losses. The benchmark S&P
500 suffered its steepest decline in two months.
A stronger-than-expected jobs report sent the dollar and 10-year
Treasury yields rising, forcing investors to face with the prospect
that the Fed could hike rates sooner rather than later.
The U.S. economy added 295,000 jobs last months, while the
unemployment rate fell to 5.5%. Wage growth, however, was sluggish,
rising a midland 2%, two-thirds as fast during a strong economic
expansion.
The S&P 500 (SPX) fell 29.78 points, or 1.4%, to 2,071.26
and lost 1.6% over the week.
The Dow Jones Industrial Average (DJI) dropped 278.94 points, or
1.5%, to 18,056.78 and lost 1.5% over the week. All of the 30
blue-chip stocks ended the session lower, consumer staples
suffering steepest declines.
The Nasdaq Composite (RIXF) ended the day down 55.44 points, or
0.3%, at 4,927.47 and recorded 0.7% loss over the week.
"It appears a lot of people were caught off guard when the jobs
report came in far better than expected, given harsh winter in the
East Coast last month," said Channing Smith, managing director at
Capital Advisors.
"Investors got a little panicky seeing interest rates move
drastically higher," Smith said.
"The stock market is caught between positive implications of a
strong jobs report, which means economy is growing, consumers are
in better shape and earnings are likely to grow," said Kate Warne,
investment strategist from Edward Jones.
"But it also means that the Fed is probably going to start
raising rates sooner," Warne noted.
Jobs data:The U.S. created a robust 295,000 jobs in February
(http://www.marketwatch.com/story/us-creates-295000-jobs-in-february-unemployment-55-2015-03-06)
and the unemployment rate fell to 5.5% from 5.7%, but more people
dropped out of the labor force, the government said Friday.
Coupled with falling inflation, the lackluster wage growth may
give the Federal Reserve room to be patient with the timing and
pace of interest rate hikes.
The dollar (DXY) soared against its major rivals
(http://www.marketwatch.com/storyno-meta-for-guid) helping push the
euro (USDEUR) to a 12-year low.. The 10-year Treasury yield spiked
13 basis points to 2.24%, the highest level this year.
"The Fed is unlikely to raise rates this year at all, because
the stronger dollar has done the tightening job for them. The Fed
knows full well how a rate hike and even stronger dollar will
disrupt markets, so they will pause before hiking," said Ed Shill,
chief investment officer at QCI Asset Management.
Bank stress tests: Late Thursday, the Fed said the U.S.'s
largest banks are strong enough to weather an economic downturn
(http://www.marketwatch.com/story/all-31-banks-had-enough-capital-after-feds-stress-test-2015-03-05-161034514),
with all 31 major institutions assessed in the stress test
receiving a passing grade.
Stocks to Watch: Bank of America Corp. (BAC) rose 1.4%, along
with many other banking shares. Staples Inc.(SPLS) shares fell 2.7%
after the office-supplies retailer said it swung to a loss
(http://www.marketwatch.com/story/staples-swings-to-fourth-quarter-loss-on-impairment-charges-2015-03-06)
in the fourth quarter.
Footwear retailer Foot Locker Inc.(FL) rose 4% after its
fourth-quarter earnings beat expectations.
Newmont Mining Corp. (NEM) slumped 7.9% on the back of a steep
drop in gold prices, making it the top decliner on the S&P
500.
For more on today's notable movers, read our Movers &
Shakers column
(http://www.marketwatch.com/story/staples-foot-locker-gap-are-stocks-to-watch-2015-03-06).
Other markets: Surging dollar hurt commodities. Oil futures
(http://www.marketwatch.com/story/oil-edges-higher-as-ecb-measures-boost-market-sentiment-2015-03-06-11032914)(CLJ5)
settled 2.3% lower at $49.61 a barrel, falling for the third
straight week. Meanwhile gold futures
(http://www.marketwatch.com/story/gold-holds-near-2-month-low-ahead-of-jobs-data-2015-03-06)(GCJ5)
dropped 2.7% to $1,164.30 an ounce, recording a 4% drop over the
week.
European stock markets closed slightly higher, after the
European Central Bank on Thursday raised its growth forecasts for
the eurozone and said it would begin government-bond buying on
Monday.
In Asia, Japanese stocks climbed to a fresh 15-year high
(http://www.marketwatch.com/storyno-meta-for-guid), while stocks in
Hong Kong and Shanghai closed in the red.
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