US Stocks Fall, Treasury Yields Rise After Jobs Report

U.S. stocks faded from their record highs on Friday, and the Standard & Poor’s 500 index was on track to snap out of its longest winning streak in four years. Treasury yields climbed after a report showed that wages across the country rose more than expected last month, which economists said should keep the Federal Reserve on pace to raise interest rates.

The government’s jobs report, often the most anticipated economic data of each month, was unusually difficult to parse after damage from recent hurricanes dragged down employment from Texas to Florida.

KEEPING SCORE: The Standard & Poor’s 500 index fell 7 points, or 0.3 percent, to 2,545, as of 11:20 a.m. Eastern time. If it stays there, it would be the first loss for the index in nine days.

The Dow Jones industrial average lost 27, or 0.1 percent, to 22,748, and the Nasdaq composite fell 12, or 0.2 percent, to 6,572. All three indexes closed at records on Thursday.

WASHOUT JOBS REPORT: Employers cut more jobs last month than they added, the first time that’s happened in seven years. It’s a sharp turnaround from earlier this year, when the strengthening job market was encouraging investors to push stocks higher and higher.

Economists had been warning of a particularly weak figure and cautioned not to take too much away from the report. Hurricanes Harvey and Irma meant the closure of thousands of businesses, and drops in employment at restaurants and bars were a big driver of last month’s decline.

Other recent economic data have been more encouraging, including particularly strong reports on the nation’s manufacturing and services sectors earlier this week.

Friday’s jobs report contained some encouraging signs. Average hourly wages jumped 2.9 percent in September from a year earlier, more than economists expected. Some of that may be due to how many lower-wage jobs were lost following the hurricanes, but the government also revised up its figure for wage growth in August.

YIELDS RISE: Stronger wage growth could push up inflation and keep the Federal Reserve on its course to slowly raise interest rates off their record lows.

The yield on the 10-year Treasury rose to 2.36 percent from 2.35 percent late Thursday after earlier touching 2.39 percent, its highest level since May.

The two-year yield climbed to 1.51 percent from 1.49 percent, and the 30-year yield held steady at 2.89 percent.

DIVIDENDS DOWN: Higher interest rates make bonds more attractive to investors looking for income, and that undercuts demand for stocks that pay relatively big dividends.

Telecom stocks in the S&P 500 fell 1.5 percent, the largest drop among the 11 sectors that make up the index. Other traditional dividend payers were also weak. Real estate stocks fell 0.7 percent, and utilities dropped 0.4 percent.

WAREHOUSE WEAKNESS: Costco Wholesale fell the most in the S&P 500 despite reporting stronger earnings for the latest quarter than expected. Analysts pointed to a slight drop in its membership renewal rates, among other factors.

Costco lost $10.01, or 6 percent, to $157.06.

COMMODITIES: Benchmark U.S. crude sank $1.60, or 3.2 percent, to $49.19per barrel. Brent crude, the international standard, lost $1.78 to $55.22 per barrel.

MARKETS OVERSEAS: The FTSE 100 in London rose 0.1 percent, France’s CAC 40 fell 0.5 percent and Germany’s DAX dipped 0.2 percent.

Japan’s Nikkei 225 rose 0.3 percent, and the Hang Seng in Hong Kong added 0.3 percent.

CURRENCIES: The dollar slipped to 112.81 Japanese yen from 112.85 yen late Thursday. The euro rose to $1.1721 from $1.1708, and the British pound fell to $1.3045 from $1.3116.

Source: Associated Press