Stocks close slightly lower

Los Angeles Times - - BUSINESS BEAT - As­so­ci­ated press

A burst of hir­ing last month led to a drop in the bond mar­ket Fri­day as traders placed bets that the Fed­eral Re­serve would raise in­ter­est rates this year. De­spite the good eco­nomic news, the stock mar­ket drifted to an­other loss, fin­ish­ing lower for the sec­ond week in a row.

The La­bor Depart­ment re­ported that U.S. em­ploy­ers added 280,000 work­ers to their pay­rolls in May and also tweaked its es­ti­mate of hir­ing in March and April, rais­ing hir­ing num­bers for the two months by a com­bined 32,000.

Traders re­acted im­me­di­ately to the re­port, drop­ping U.S. gov­ern­ment bonds and shoot­ing yields up. The bench­mark 10-year Trea­sury note bounced to a high for the year, 2.43%, be­fore drift­ing back to 2.40%. The dollar gained strength against the Ja­panese yen and other ma­jor cur­ren­cies.

“I was pleas­antly sur­prised,” said Rus­sell Price, Ameriprise Fi­nan­cial’s se­nior econ­o­mist. “This adds to the re­cent spate of pos­i­tive data that shows the econ­omy is re­ally pulling out of its win­ter slump.”

But ma­jor stock in­dexes fin­ished mixed. The Dow Jones industrial av­er­age fell 56.12 points, or 0.3%, to 17,849.46.

The Stan­dard & Poor’s 500 in­dex lost 3.01 points, or 0.1%, to 2,092.83, while the Nas­daq edged up 9.33 points, or 0.2%, to 5,068.46.

Big banks and other com­pa­nies that ben­e­fit from ris­ing in­ter­est rates gained: JPMor­gan Chase, Wells Fargo and PNC Fi­nan­cial Ser­vices hit all-time highs.

Jeremy Zirin, head of in- vest­ment strat­egy at UBS Wealth Man­age­ment, said the rapid rise in in­ter­est rates in re­cent months has un­set­tled some in­vestors. In April, when traders were more con­cerned about the strength of the global econ­omy, the yield on the 10-year Trea­sury fell be­low 1.90%.

In gen­eral, a rise in in­ter- est rates ref lects eco­nomic growth, but a quick leap could slow the econ­omy down by trig­ger­ing a sud­den drop in lend­ing.

Zirin said in­vestors “want to see the rise in bond yields be more tem­pered. They can han­dle higher in­ter­est rates as long as they come at a mea­sured pace.”

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