- www.usatoday.com/story/money/
markets/2015/03/06/stocks... Mar 06, 2015 · Dow plunges as jobs beat raises rate hike fears. ... It also almost wiped out the Dow's gain for the year, leaving it with a 0.2% 2015 gain.Adam Shell, USA TODAY
Stocks fell hard Friday as Wall Street feared a strong jobs report is likely to speed up the Federal Reserve's rate-hike timetable.USA TODAY Editor Dave Callaway talks about why Apple was added to the iconic stock index now and what that means for investors. USA TODAY
In a sign of strength in the labor market, the government reported a better-than-expected 295,000 jobs were created in February and that the unemployment rate fell more than expected to 5.5%.
Economists had forecast 240,000 new jobs in February, compared to 257,000 in January. Both headline numbers topped expectations. The economy has now produced more than 200,000-plus jobs for 12 months in a row.
The Dow Jones industrial average plunged 279 points, or 1.5%, to 17,857. The Standard & Poor's 500 index dropped 30 points, or 1.4%, to 2071. The Nasdaq composite fell 56 points, or 1.1%, to 4927.
The yield on the 10-year Treasury is skyrocketing, as it jumped to 2.25% from 2.12% Thursday. Oil sold on the U.S. market fell 2.8% to below $50 a barrel.
Big news on the Apple front -- it's joining the elite, 30-company Dow Jones industrial average on March 19. Shares rose 0.2% to $126.60.
The weakness in the stock market suggests that some investors might be pricing in a June interest rate hike from the Federal Reserve. Recently, Wall Street had pushed the Fed's so-called "lift-off" date to September.
"Traders will see this headline number as a reason for the Fed to move sooner than later," says Todd Schoenberger, managing Partner at LandColt Capital.
Indeed, Steven Wieting, global chief investment strategist at Citigroup, says record-low interest rates of 0% may no longer be warranted.
"The pace at which labor markets are tightening suggests a zero policy rate is simply too low for the U.S. economy," Wieting told clients.
Short-term markets, he adds, are "now pricing in a nearly 50% probability that a 25 basis point Fed tightening could come as early as June, rising thereafter."
And while he thinks the stock market can continue to rise in the "early stages of a mild Fed tightening cycle," he expects "a more volatile backdrop and slower progress."
GAINERS:Stocks bucking the trend and rising today
RATE TANTRUM: 10-year note hits 2.25% on strong jobs
Schoenberger doesn't agree with the market's knee-jerk reaction to sell off stocks for fear of a sooner-than-expected Fed rate hike.
Investors are "naïve to think this way because the Fed isn't going to hike rates based on headline job numbers," he says. "They'll do it if they see immediate inflation. And, the one data point issued in the report is the average hourly earnings figure -- and it increased only 0.1%. This will not move the Fed."
"The upside surprise should no longer be a surprise because, despite what many pessimists wish to believe, the economy is expanding at a healthy clip," says Schoenberger.
U.S. stocks have had an eventful week. On Monday, the Nasdaq composite closed above the 5000 barrier for the first time in 15 years and the Dow Jones industrial average and Standard & Poor's 500 stock index notched fresh all-time closing highs. Yesterday, both the Dow and S&P 500 rose, ending a brief two-day losing streak.
Friday's drop left the Dow below 18,000 for the first time since Feb. 9. It also almost wiped out the Dow's gain for the year, leaving it with a 0.2% 2015 gain.
The U.S. stock market will celebrate the bull market's sixth birthday on Monday. The current bull market has seen a tripling in value of the S&P index and could join only three other bull markets since WWII that have made it to its sixth birthday, according to S&P Capital IQ.
In Asia, Japan's Nikkei 225 was up 1.2% to 18,971, while the Hong Kong Hang Seng fell 0.1% to 24,164.
European stocks are also mixed. Germany's DAX is 0.4% higher. France's CAC 40 is flat, and Britain's FTSE 100 is off 0.7%.
Stocks slipped at Friday's opening bell as investors digest the February jobs report. The unemployment rate dropped to 5.5% with 295,000 jobs created last month. However, average hourly earnings increased a meager 0.1% and the average work week was Newslookend quote from:www.usatoday.com/story/money/markets/2015/03/06/stocks... Mar 06, 2015 · Dow plunges as jobs beat raises rate hike fears. ... It also almost wiped out the Dow's gain for the year, leaving it with a 0.2% 2015 gain.
Friday, March 6, 2015
Dow jones: 17,856.78: Dow plunges on rate change fears 278.94 points
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