By Anora Mahmudova and Sara Sjolin, MarketWatch
Economy added 295,000 jobs in February, unemployment rate at
5.5%
NEW YORK (MarketWatch) -- U.S. stocks fell on Friday, after a
stronger-than-expected payrolls report and subsequent rises in the
dollar and 10-year Treasury yields pointed to expectations that
rates hikes are coming sooner than later.
A strong jobs report painted a positive picture for the strength
of the U.S. economic recovery, with 295,000 jobs added last month
and the unemployment rate falling to 5.5%. Only wage growth was
less than stellar, rising a midland 2%, two-thirds as fast during a
strong economic expansion.
Separately, the trade deficit narrowed by less than expected.
The main indexes were set to end the week with losses.
The S&P 500 (SPX) saw losses across the board, with nine out
of 10 main sectors trading in the red.
The Dow Jones Industrial Average (DJI) saw a triple-digit loss
shortly after the opening bell. Nearly all of the 30 blue-chip
stocks were trading lower. AT&T Inc. (T) was one of the top
decliners after news that Apple Inc. (AAPL) will replace it on the
index
(http://www.marketwatch.com/story/apple-to-join-dow-industrials-replaces-att-2015-03-06).
The Nasdaq Composite (RIXF) was slightly lower, with losses
capped after a rally in Apple Inc. shares.
"The stock market is caught between positive implications of a
strong jobs report, which means economy is growing, consumers are
in a better shape and earnings are likely to grow. But it also
means that the Fed is probably going to start raising rates
sooner," said Kate Warne, investment strategist from Edward
Jones.
"While the initial reaction is that investors are not happy with
rates going up sooner, this may change once they realize that a
growing economy is ultimately better for stocks," Warne said.
"Bond markets and the dollar are better indicators for rates
expectations in that sense and they clearly are signalling that
short-terms rates will rise sooner," Warne added.
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.
January's number was cut to 239,000 from 257,000.
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.
Separately, the U.S. trade deficit narrowed in January after
hitting a two-year high in December.
The ICE dollar index (DXY) shot up 1%
(http://www.marketwatch.com/storyno-meta-for-guid) to 97.29 and
surged to a 12-year high against the euro (USDEUR) after the upbeat
jobs report. The 10-year Treasury yield spiked 7.9 basis points to
2.20%.
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 getting
a passing grade.
Stocks to Watch: Staples Inc.(SPLS) shares fell 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 sharply after its
fourth-quarter earnings beat expectations.
Gap Inc. (GPS) shares dropped, after the clothing retailer late
Thursday said its February same-store sales fell 4%
(http://www.marketwatch.com/story/gap-posts-surprise-february-sales-decline-2015-03-05-17485316),
significantly worse than the average 1.3% gain analysts surveyed by
Retail Metrics were looking for.
Shares of Calithera Biosciences Inc.(CALA) surged 25% to $16.65
after the company on Thursday announced an exclusive licensing
agreement with TransTech Pharma to help develop drugs that disrupt
the ability of cancer cells to convert glucose to energy.
On a more downbeat note in the biotech space, Orexigen
Therapeutics Inc.(OREX) slumped 9% after a report alleged data from
one of its drug trials could be unreliable
(http://www.marketwatch.com/story/orexigen-drops-after-report-questions-drug-data-reliability-2015-03-05).
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)
fell 1% to $50.20 a barrel, while
(http://www.marketwatch.com/storyno-meta-for-guid)gold futures
(http://www.marketwatch.com/story/gold-holds-near-2-month-low-ahead-of-jobs-data-2015-03-06)(GCJ5)
dropped 1.5% to $1,178.1 an ounce.
European stock markets continued their march 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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