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S&P 500 plunges, Treasury yields rise and dollar rallies after strong US jobs report

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NEW YORK, Aug 5 (Reuters) – The S&P 500 fell, Treasury yields rose and the dollar rose on Friday after the July U.S. jobs report beat expectations, raising the odds of a tightening continued monetary policy from the Federal Reserve.

Wall Street pared losses as the session progressed. At the close, the Nasdaq joined the flagship index in the red and the Dow blue-chip reversed course to end in positive territory.

Benchmark U.S. Treasury yields and oil prices rose as stronger-than-expected payrolls data appeared to confirm the economy was not yet in recession, raising the likelihood of hikes more aggressive rate cuts from the Fed in September.

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The jobs report “telegraphed that work needs to be done on the side of the Fed, regarding its interest rate policy,” said Matthew Keator, managing partner of Keator Group, a wealth management firm at Lenox. , Massachusetts. “That was certainly the first reaction from the markets.”

The Labor Department’s jobs report showed the US economy added 528,000 jobs in July, more than double the 250,000 expected, while wage inflation remained elevated and the labor force participation rate has dropped slightly. Read more

“The payroll number is great from a demand perspective, more people getting paid is great for the economy,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

Signs of economic solidity helped ease risk aversion at the end of the week.

“The jobs data raises the prospect of a soft landing,” Keator said, adding that Fed Chairman Jerome Powell “highlighted the fact that a strong labor market has not always accompanied by recessions”.

The Dow Jones Industrial Average (.DJI) rose 76.65 points, or 0.23%, to 32,803.47, the S&P 500 (.SPX) lost 6.75 points, or 0.16%, to 4,145.19 and the Nasdaq Composite (.IXIC) fell 63.03 points, or 0.5%, to 12,657.56.

European stocks fell after US jobs data fueled expectations of a hawkish Fed policy. Read more

The pan-European STOXX 600 index (.STOXX) lost 0.76% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 0.20%.

Traders work on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., August 2, 2022. REUTERS/Andrew Kelly

Read more

Emerging market stocks rose 0.75%. MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) closed up 0.61%.

Yields on US Treasuries rose and a closely watched part of the yield curve touched its deepest inversion since August 2000 on the increased likelihood of another 75 basis point hike in interest rates from the central bank in September.

Benchmark 10-year notes last fell 42/32 to 2.8287%, down from 2.676% on Thursday night.

The 30-year bond last fell 65/32 to 3.0662%, down from 2.961% on Thursday night.

The dollar rallied against a basket of currencies in the wake of the jobs report. Read more

The dollar index rose 0.84%, with the euro falling 0.63% to $1.0178.

The Japanese yen weakened 1.57% against the greenback at 135.02 to the dollar, while the pound last traded at $1.2067, down 0.74% on the day.

While crude prices rose on the prospect of strong demand, they ended the week near multi-month lows on lingering recession fears. Read more

U.S. crude rose 0.53% to settle at $89.01 a barrel, while Brent crude stood at $94.92 a barrel, up 0.85% on the day.

Gold plunged as waning recession fears dulled the shine of the safe-haven metal.

Spot gold fell 1.0% to $1,772.82 an ounce.

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Reporting by Stephen Culp in New York Additional reporting by Elizabeth Howcroft in London Editing by Chizu Nomiyama and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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