U.S. Stocks Slip, Treasuries Tumble on Jobs Data: Markets Wrap

(Bloomberg) — U.S. stocks fell from all-time highs, Treasuries tumbled and the dollar rallied after a strong jobs report clouded the Federal Reserve’s rate plans. Gold retreated.

The fell in thin post-holiday trading to pare a weekly advance to 1.7%. The measure slumped as much as 0.9% after the jobs data signaled a vibrant labor market, but ground higher in the afternoon. Banks led the recovery after the retook 2% and two-year rates hit 1.85%. The dollar surged versus major peers. Gold fell toward $1,400 an ounce.

The latest labor report delivered signs that the economy remains on track, countering some recent data that showed weakness in manufacturing. Stocks had rallied to records and bonds surged on market expectations that the central bank will lower interest rates by at least a quarter percentage point at its July meeting, though fed fund futures showed traders trimming the amount of easing they expect.

“The positive numbers for the labor markets have given investors a bit of a conundrum as continuing strength in employment should support earnings while at the same time they make a FOMC cut less likely,” said Chris Gaffney, president of world markets at TIAA Bank. “Very thin markets due to the holiday weekend have also contributed to some of the volatility.”

Elsewhere, the euro declined after German factory orders came in far weaker than expected, with most European bonds edging down. Earlier, equity benchmarks in Japan, China and South Korea rose along with Australian stocks. Iron-ore prices tumbled after China’s largest steel-industry group urged officials to maintain order after the commodity’s recent surge to a five-year high.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.2% as of 4 p.m. New York time.
• The Index sank 0.7%, the biggest dip in more than a month.
• The MSCI Asia Pacific Index declined 0.1%.
• The MSCI Emerging Market Index decreased 0.5%.

Currencies

• The Bloomberg Dollar Spot Index gained 0.4%.
• The euro decreased 0.5% to $1.1225, the weakest in two weeks.
• The British pound fell 0.4% to $1.2526.
• The Japanese yen dipped 0.7% to 108.507 per dollar.

Bonds

• The yield on 10-year Treasuries climbed nine basis points to 2.04%.
• The two-year rate jumped 11 basis points to 1.87%.
• Germany’s 10-year yield rose four basis points to -0.363%.

Commodities

• fell 1.3% to $1,402.90 an ounce.
• West Texas Intermediate crude fell 0.3% to $57.51 a barrel.
• Iron ore sank 5.8% to $107.70 per metric ton, the largest tumble in more than two years.