Stocks fall on strong jobs report
NEW YORK — The stock market stumbled Monday as investors worried that the global economy could be slowing just as last week’s blockbuster U. S. jobs report appeared to open the way to the first rate change from the Federal Reserve in nearly a decade. It was the first notable decline for the market in six weeks.
The Dow Jones industrial average fell 179.85 points, or 1 percent, to 17,730.48, slipping back into negative territory for the year. The Standard & Poor’s 500 index dropped 20.62 points, or 1 percent, to 2,078.58. The Nasdaq composite fell 51.82 points, or 1 percent, to 5,095.30.
Investors continue to deal with the fallout of October’s unexpectedly strong jobs report, which greatly increased expectations that the U. S. Federal Reserve is likely to raise short- term interest rates, which have been close to zero since the 2008 financial crisis.
The Labor Department said U. S. employers created 271,000 jobs last month, more than even the most bullish of forecasts. The unemployment rate also dropped to 5 percent, the lowest in seven years. The surprising sign of strength could encourage the Fed to finally start to return interest rates to normal levels.
“This all shows how Friday’s employment report possibly changed the game,” John Briggs, head of fixed income strategy at RBS, wrote in a note to investors.
The possibility of higher interest rates continued to push investors to reposition their portfolios. Even in a declining stock market, investors also sold government bonds. The yield on the 10- year Treasury note rose to 2.34 percent. That’s up from 2.33 percent Friday and significantly higher than the 2.23 percent level on Thursday. Yields on other Treasuries, including the two- year and three- year notes, also rose.
Securities based on which way the Fed will move interest rates show roughly a 70 percent chance the central bank will raise rates.
Global stocks were also reacting to news out of China, where customs data showed the country’s imports plunged 18.8 percent in October from a year earlier, damping hopes for a Chinese economic rebound this quarter. Exports shrank 6.9 percent in a sign of weak global demand.
Germany’s DAX index fell 1.6 percent, France’s CAC- 40 index dropped 1.5 percent and the U. K.’ s FTSE 100 lost 1 percent. In Asia, stocks rose on speculation that Asian governments would be more proactive in helping their ailing economies than their European counterparts.
“We’ve known about China’s issues for a while now, but this will likely lead to the government doing more stimulus,” said Quincy Krosby, market strategist with Prudential Financial.
Among individual companies, travel site Priceline fell $ 138.75, or 9.6 percent, to $ 1,311.15 after the company’s outlook for the fourth quarter, a typically strong period for travel companies, came up short of analysts’ expectations.
Drugmaker Mallinckrodt fell $ 11.88, or 17 percent, to $ 58.01 after the short- selling firm Citron Research warned that the company might have issues similar to Valeant Pharmaceuticals. Citron became well- known earlier this year when it published a report on Valeant, whose stock has fallen by two thirds since the summer.
Benchmark U. S. crude fell 42 cents, or 0.9 percent, to $ 43.87 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 23 cents to $ 47.19 a barrel in London.
Precious and industrial metals prices closed mixed. Gold edged up 40 cents to $ 1,088.10 an ounce, silver dropped 28 cents, or 1.9 percent, to $ 14.41 an ounce and copper rose a penny, or 0.5 percent, to $ 2.23 a pound.