US stocks, dollar slide after weak jobs report
Specialists Anthony Matesic, left, and Mario Picone, center, work with trader Tommy Kalkas on the floor of the New York Stock Exchange, Friday, June 3, 2016. Stocks are broadly lower in early trading and bond prices are higher after the government reported a sharp slowdown in hiring last month.
A slide in financial and consumer stocks led U.S. indexes lower in late morning trading Friday as investors weighed the implications of a key government report showing that hiring slowed sharply in May. The downbeat job survey was a sign of economic weakness that could dissuade the Federal Reserve from raising interest rates this month. The dollar fell sharply against most major currencies, while bond prices surged as investors sought safety in U.S. government-backed debt.
KEEPING SCORE: The Dow Jones industrial average fell 92 points, or 0.5 per cent, to 17,745 as of 11:20 a.m. Eastern time. The Standard & Poor's 500 index shed 13 points, or 0.7 per cent, to 2,091. The Nasdaq composite index lost 46 points, or 0.9 per cent, to 4,925.
US ECONOMY: The Labor Department reported that the U.S. economy added only 38,000 jobs in May, the lowest amount in five years. The unemployment rate fell to 4.7 per cent from 5 per cent, but mainly because about half a million unemployed people stopped looking for work. Separate reports out Friday also showed a mixed snapshot of the economy. The Institute of Supply Management said U.S. services firms grew in May at the slowest pace in more than two years, while the Commerce Department said orders to U.S. factories rose in April by the largest amount in six months.
THE QUOTE: The jobs report is likely to push the Federal Reserve to hold off raising its key interest rate any time soon, said Terry DuFrene, global investment specialist at J.P. Morgan Private Bank.
"It certainly takes off the table any kind of chance of a rate movement at all in the month of June," DuFrene said. "Now that's got to be pushed out until maybe the early fall before there's any sort of rate movement at all."
FINANCIALS STUMBLE: Several banks and financial services companies fell amid speculation that the Fed will opt not to raise its benchmark interest rate. Lower interest rates make it harder for banks to make money from loans. ETrade Financial slumped $1.68, or 6 per cent, to $26.45, while Charles Schwab lost $1.85, or 6 per cent, to $28.99. Citigroup fell $2.38, or 5.1 per cent, to $44.59.
GOLD RUSH: Mining companies were among the biggest gainers as the price of gold, silver and copper surged. Newmont Mining gained $2.56, or 7.9 per cent, to $34.91, while Freeport-McMoRan added 34 cents, or 3.2 per cent, to $11.
NOT SO BAD: Gap rose 3.2 per cent a day after the clothing chain operator said sales at established stores declined 6 per cent in May, better than the 7 per cent drop forecast by financial analysts. The stock added 59 cents to $18.92.
BONDS AND CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 1.71 per cent from 1.80 late Thursday, a large move. In currency markets, the dollar was among the biggest movers, falling to 106.71 yen from 108.91 the day before. The euro jumped to $1.1335 from $1.1148.
ENERGY: Benchmark U.S. crude oil was down 47 cents, or 1 per cent, to $48.78 a barrel in New York. Brent crude, which is used to price international oils, was down 60 cents, or 1.2 per cent, at $49.44 a barrel in London.
MARKETS OVERSEAS: In Europe, major stock indexes mostly fell. Germany's DAX fell 1.2 per cent, while France's CAC 40 lost 1.1 per cent. Britain's FTSE 100 slipped 0.1 per cent. Earlier in Asia, Japan's benchmark Nikkei 225 added 0.5 per cent, while South Korea's Kospi inched up 0.04 per cent. Hong Kong's Hang Seng added 0.4 per cent. The S&P/ASX 200 of Australia jumped 0.8 per cent.
- Editor:Albert | Source: The Associated Press
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