The Morning Journal (Lorain, OH)
S&P 500 breaks winning streak
U.S. stocks faded a bit from their record highs on Friday after telecom and energy stocks sank.
NEW YORK » U.S. stocks faded a bit from their record highs on Friday after telecom and energy stocks sank. The loss for the Standard & Poor’s 500 index was small, but it was the first in nearly two weeks.
Much of the day’s action was centered on the government’s jobs report, which is usually the most anticipated economic data of each month, but it was a muddled one.
Economists cautioned not to read too much into the hiring numbers, which were far weaker than expected, because they were distorted by hurricanes that damaged businesses from Texas to Florida. Investors focused instead on a stronger-than-expected rise in workers’ wages, which helped to push Treasury yields higher.
The S&P 500 fell 2.74 points, or 0.1 percent, to 2,549.33. The loss meant the end of the longest winning streak for the index in four years. Roughly nine stocks fell for every five that rose on the New York Stock Exchange.
The Dow Jones industrial average slipped 1.72, or less than 0.1 percent, to 22,773.67. The Nasdaq composite added 4.82, or 0.1 percent, to 6,590.18. All three indexes had closed at records on Thursday.
The government’s jobs report showed that 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.
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.
Many investors saw September’s job losses as an aberration. Other economic data have been more encouraging, including strong reports on the nation’s manufacturing and services sectors earlier this week.
Friday’s jobs report also contained signs of strength. 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.
“The previous month’s revision, that probably has the most information” of all the data points in the government’s jobs report, said Jon Adams, senior investment strategist at BMO Global Asset Management. “From the Fed’s perspective, this doesn’t change anything in terms of overall policy, but it makes them a little more worried about inflation.”
If rising wage growth feeds into higher prices across the economy, it makes the Fed that much more likely to keep raising rates from their record lows. As a result, investors made moves Friday in anticipation of a rate increase in December.
The yield on the 10-year Treasury jumped as high as 2.39 percent shortly after the release of the jobs report, up from 2.35 percent late Thursday. The gains faded later in the day, which traders said may have been due to worries about tensions with North Korea. A Russian lawmaker said that North Korea is preparing to testfire a long-range missile soon.
By Friday evening, the 10-year yield sat at 2.36 percent. The twoyear Treasury yield climbed to 1.52 percent from 1.49 percent, and the 30-year yield rose to 2.91 percent from 2.89 percent.