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 Oil prices dipped, ending the week lower after two weeks of gains.
Wall Street ended lower, led by plunging technology shares after
poor results from data company Tableau Software <DATA.N> and
networking platform LinkedIn <LNKD.N>. The S&P 500 information
technology sector fell 3.4 percent, while the Nasdaq Composite Index
slumped to its lowest close since October 2014.
While U.S. non-farm payrolls increased by just 151,000 jobs last
month, well below forecasts of 190,000, the unemployment rate fell
to 4.9 percent, the lowest since February 2008, and a sharp rise in
wages suggested the labor market recovery remained on track.
Despite the weak headline figure, markets took the rest of the
payrolls report hawkishly. Fed funds futures contracts showed
traders boosted their view of the chances of a Fed rate hike in
December to about 40 percent. Before the report, they expected the
Fed to wait until well into next year before raising rates again.
The report helped the dollar rebound from two days of losses that
forced the unwinding of large bets in favor of the greenback against
other currencies worldwide. The dollar had weakened in recent days
after dovish commentary from Fed officials, but some believe this
report changes the calculus somewhat.
The increase in U.S. hourly wages and decline in the unemployment
rate "serves as a caution to markets that it is too early to take a
Federal Reserve March hike completely off the table," said Mohamed
El-Erian, chief economic advisor at Allianz in Newport Beach,
California.
The Dow Jones industrial average <.DJI> fell 211.75 points, or 1.29
percent, to 16,204.83, the S&P 500 <.SPX> lost 35.43 points, or 1.85
percent, to 1,880.02 and the Nasdaq Composite <.IXIC> dropped 146.42
points, or 3.25 percent, to 4,363.14.
After a weak U.S. service-sector business sentiment report on
Wednesday and dovish comments from New York Federal Reserve chief
William Dudley, U.S. money markets shifted to forecast no move in
official rates this year.
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The Fed's own forecasts, meanwhile, still suggest four increases by
year-end, a pace many consider unlikely, which is likely to be
addressed by Fed Chair Janet Yellen next week when she appears
before Congress for semi-annual monetary policy testimony.
The dollar index rose 0.5 percent to 96.945, having endured a pretty
rough week. The dollar shed 2.7 percent this week as expectations
that the Fed. The U.S. central bank, would raise rates at least once
this year evaporated on signs of domestic weakness and broader
concerns over global growth.
The dollar's decline was spurred by traders unwinding complicated
cross-market bets that involved borrowing in euro and yen and buying
U.S. assets.
U.S. Treasury note yields <US10YT=RR> rose after the jobs report
before falling back. The 10-year yield was little changed at 1.84
percent. Shorter-dated Treasuries were weaker, causing the yield
curve to flatten, a signal of concern about economic slowdown. The
10-year yield has still fallen by 10 basis points since the start of
this month.
Crude oil dipped at the end of the day. Brent crude lost 1 percent
to $34.13 a barrel, while U.S. crude fell 2.3 percent to $31.00.
(Editing by Chizu Nomiyama and James Dalgleish)
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