US stocks edged lower with the S&P 500 posting a second straight weekly drop as a stronger than expected jobs report bolstered the case for an interest hike later this year.
The Dow Jones Industrial Average slipped by 56.12 points or 0.3% to end at 17,849.46 points. The blue-chip index closed 0.9% lower for the week having pulled back from record territory reached late last month on uneven economic data and uncertainty over the timing of the Federal Reserve rate hike.
“The market is addicted to the Fed’s liquidity, and this certainly puts more ammunition in the Fed’s plan to start lift-off in September,” Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, told Reuters.
“It makes sense that the market would fall off on that, but this is good news.”
The S&P 500 index slipped 3 points or 0.1% to end at 2092.63 points. The benchmark index ended the week 0.7% lower-its second straight weekly retreat.
The Nasdaq Composite bucked the trend to advance 9.33 points or 0.2% to end the day at 5068.46 points. The technology heavy index ended the week less than 0.1% in the red.
The labor department reported that non-farm payrolls for May grew by 280,000 while the unemployment rate rose slightly to 5.5% from 5.4% for the same period.
This bettered the consensus estimate of analysts polled by the Wall Street Journal who expected a growth by 225,000.
The jobs data triggered a selloff in equities and the bond market with traders and investors saying the strong jobs data showed that the economy was slowly pulling itself out of its slump in the first quarter.
The yield on the benchmark 10 year bond on the bond market rose to their highest level in more than 8 months after the jobs data.
“For the economy, the bottom line is that [the jobs data] is a good number,” Brent Schutte, senior investment strategist at BMO Global Asset Management, which oversees $249 billion, told the Wall
“To the extent that it brings people closer to believing that the Fed will raise rates in September, it will be a near-term hit to the equity markets and the bond markets.”
To contact the reporter of the story: Samuel Rae at email@example.com