U.S. Markets Wrap: Stocks, Dollar Decline After Jobs Report

U.S. stocks fell for a fourth day and the dollar slumped as employers cut more jobs than economists forecast, increasing speculation the Federal Reserve will postpone the withdrawal of monetary stimulus as the economy struggles to recover.


The dollar fell against the euro as the economy shed 263,000 positions in September, more than the 175,000 median estimate of economists in a Bloomberg survey. Gold rallied as an alternative to the falling greenback. Treasuries declined as yields near the lowest in more than four months hurt demand before next week’s $78 billion in auctions. Oil fell after two days of gains.

“Reality is beginning to set in that this recovery is going to be very slow in developing and erratic as it goes on,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co. in Nashville, Tennessee, which manages $18 billion. “The market was up for seven straight months. It’s due for a correction.”

The Standard & Poor’s 500 Index retreated 0.5 percent to 1,025.21 at 5:13 p.m. in New York. The Dow Jones Industrial Average lost 21.61 points, 0.2 percent, to 9,487.67.

The S&P 500 declined 1.8 percent this week on concern the seven-month rally in equities has outpaced prospects for an economic recovery. The benchmark index jumped almost 15 percent in the July-to-September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent surge in the first half of 1975.




Most Since 1983

September’s job losses increased the unemployment rate from 9.7 percent in August to 9.8 percent, the highest since 1983. Since the recession began in December 2007, 7.2 million positions have been eliminated, the biggest decline since the Great Depression.

“The number shows this is going to be a slow and painful recovery process,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. “We will have sub-trend growth for an extended period. There is still too much debt in the system and if we keep losing jobs like this we will not get income growth.”

Industrial companies in the S&P 500 fell 1.2 percent, the biggest decline among the index’s 10 industry groups. Orders placed with U.S. factories fell 0.8 percent after a revised 1.4 percent increase in July that was larger than previously estimated, the Commerce Department said. Excluding transportation equipment, orders rose 0.4 percent.

Dollar Decline

General Electric Co., the world’s biggest maker of power- plant turbines, fell 3.8 percent to $15.36. Honeywell, the world’s largest maker of airplane controls, lost 2.2 percent to $35.60.
The dollar touched the strongest level versus the euro in almost a month before erasing its gain as concern rising unemployment will push back the timeline for an interest rate increase by the Fed. Interest-rate futures contracts on the Chicago Board of Trade showed a 38 percent chance the central bank would increase the fed funds target from the range of zero to 0.25 percent through March, compared with 45 percent odds yesterday.

The dollar declined 0.2 percent to $1.4576 per euro, from $1.4545 yesterday. It earlier climbed as much as 0.4 percent to $1.4481, the strongest since Sept. 9. The yen fell 0.2 percent to at 89.79 versus the dollar, compared with 89.60.

Over the past few months, the dollar tended to appreciate on negative U.S. economic reports as investors sought safety in the world’s main reserve currency.

Treasuries Slump

That pattern may be changing as bad news cements expectations for the Fed to keep its interest rates low while other central banks may start to increase theirs, according to Laurent Desbois, president in Montreal of Fjord Capital Inc., a currency fund manager with $750 million under management.
Treasuries declined as the yield on the 10-year note rose four basis points, or 0.04 percentage point, to 3.22 percent in New York, according to BGCantor Market Data. The 3.625 percent security fell 13/32, or $4.06 cents per $1,000 face amount, to 103 10/32. The yield touched 3.1 percent, the lowest level since May 18.

“We rallied so much yesterday and throughout the week that this is a good point to stop and start to build a concession for next week’s supply,” said Martin Mitchell, head of government- bond trading at the Baltimore unit of Stifel Nicolaus & Co. “Pullbacks are an opportunity to buy.”

The U.S. will next week auction $39 billion of three-year notes, $20 billion in 10-year securities, $12 billion in 30- year bonds and $7 billion of 10-year Treasury Inflation Protected Securities over four consecutive days.

‘About The Buck’

Oil for November delivery fell 99 cents, or 1.4 percent, to $69.83 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, it touched $68.32.
“The economy is faltering, and today’s economic numbers point it out very clearly,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Main Street is not getting better, and that is where the rubber hits the road as far as demand goes.”

Gold futures for December delivery climbed $3.60, or 0.4 percent, to $1,004.30 an ounce on the Comex division of the New York Mercantile Exchange. This week, the metal gained 1.3 percent.
“It’s about the buck,” said Frank Lesh, an analyst at FuturePath Trading LLC in Chicago. “The dollar is, has been and will be the main driver for gold.”

- Via Bloomberg