Wall Street falls as solid jobs report boosts bond yields

A trader works on the floor of the New York Stock Exchange. — Reuters pic
A trader works on the floor of the New York Stock Exchange. — Reuters pic

NEW YORK, Oct 6 ― dropped for a second straight day today, weighed down by another rise in Treasury yields in the wake of a solid jobs report that capped off a week of robust data.

The losses were led by heavyweight stocks in the technology and communication services sectors including all members of the so-called FAANG group ― Facebook, Amazon, , Netflix and Alphabet. Online retailer Amazon, part of the consumer discretionary sector, lost 1 per cent.

Nonfarm payrolls increased less than expected in September, likely due to the effect of Hurricane Florence, though data for July and August was revised higher, and the unemployment rate fell to 3.7 per cent, a Labor Department report showed.

“There’s no question the job market in the United States is possibly at its best in a generation – there’s no question or debate about that,” said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.

“The jobs report has become an report.”

The report pushed longer-dated US Treasury yields higher, with the 10-year note touching 3.248 per cent. That piled more pressure on US stocks, which are trading near record-high levels, raising concerns about valuations in the pricier names with the corporate earnings reporting season on tap.

After the data, interest rate futures traders were still largely expecting a Fed rate hike in December while the market’s gauges on investors’ inflation outlook rose.

will have no choice because if they don’t remain competitive with the risk-free rate of return people will stop buying them anyway and they will start going into bonds,” said Walter Zimmerman, chief technical analyst at ICAP in Jersey City, New Jersey.

“How does the adjust for that? By lowering the price and therefore increasing the rate of return.”

The Dow Jones Industrial Average fell 180.43 points, or 0.68 per cent, to 26,447.05, the S&P 500 lost 16.04 points, or 0.55 per cent, to 2,885.57 and the Nasdaq Composite dropped 91.06 points, or 1.16 per cent, to 7,788.45.

For the week, the S&P fell 0.98 per cent, the Dow slipped 0.04 per cent and the Nasdaq dropped 3.2 per cent. It was the biggest weekly decline for the Nasdaq since March.

Still, equities closed off session lows. The S&P found support at its 50-day moving average at 2,877 and the Nasdaq at its 100-day moving average of 7,778.

The technology sector sank 1.27 per cent, dropping for the second day in a row on a fall in Intel and Microsoft.

Apple fell 1.6 per cent after David Einhorn’s Greenlight Capital said it sold its remaining shares in the company on growing fear of “ retaliation against ’s trade policies”.

The recently constituted communication services sector , which houses Netflix, Facebook and Alphabet, dropped 1.04 per cent.

The only gainer among the 11 major S&P sectors were defensive utilities, which advanced 1.57 per cent.

Tesla slumped 7.05 per cent after CEO Elon Musk stirred nerves about the settlement of his securities fraud lawsuit by mocking the U.S. Securities and Exchange Commission on Twitter. Einhorn said his Tesla short was the second biggest winner last quarter.

Declining issues outnumbered advancing ones on the NYSE by a 2.15-to-1 ratio; on Nasdaq, a 2.27-to-1 ratio favoured decliners.

The S&P 500 posted 10 new 52-week highs and 24 new lows; the Nasdaq Composite recorded 17 new highs and 118 new lows.

Volume on U.S. exchanges was 7.62 billion shares, compared to the 7.16 billion average for the full session over the last 20 trading days. ― Reuters

Source: The Malay Mail Online

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