MARKETS-STOCKS/USA OPEN-JOBS Wall Street dips as jobs report stronger than expected

Record ID: 150180

  • Title: MARKETS-STOCKS/USA OPEN-JOBS Wall Street dips as jobs report stronger than expected
  • Date: 5th June 2015
  • Summary: PITTSBURGH, PENNSYLVANIA, UNITED STATES (JUNE 5, 2015) (REUTERS) (SOUNDBITE) (English) GUS FAUCHER, SENIOR ECONOMIST, PNC FINANCIAL, SAYING: "We think that the first rate hike will come in September. We actually saw inflation slow a little bit in April, moving further away from the Fed's two percent target. They would like to see inflation pick up a little bit. I think the
  • Embargoed: 20th June 2015 13:00
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  • Topics: General
  • Reuters ID: LVABKGKPO60TESJRBK34L555Y3Y6
  • Aspect Ratio: 16:9
  • Story Text: U.S. stocks slipped on Friday (June 5) after data showed that U.S. job growth accelerated sharply in May and wages picked up, signs of momentum in the economy that could revive expectations of an interest rate hike in September.
    Nonfarm payrolls increased by 280,000 last month, the largest gain since December, and above the 225,000 that economists polled by Reuters had expected. Average hourly earnings grew by eight cents.
    "This is a very solid report," said Gus Faucher, senior economist at PNC Financial.
    "Good growth in earnings so overall very solid report and it's what we're looking for."
    The better-than-expected jobs report signaled that growth was gaining traction, but Wall Street took a dim view as a potential rate hike could increase the cost of borrowing.
    "We think that the first rate hike will come in September," said Faucher.
    "I think June is still too soon given that slowing in inflation, but I think that by the time we get to September we'll have had another couple good months of job growth, we'll have a first read on 2nd quarter GDP that will indicate that the economy is expanding again and we'll see inflation picking up and that should be enough for the Fed to move ahead," he added.
    The Fed has kept overnight rates near zero since December 2008 and the economy's sluggishness had left markets doubting whether the Fed would be able to raise rates this year.
    Bolstered by cheap credit, the U.S. stock market is trading at record levels but has stayed within a narrow trading range as investors look for more clarity on the economy.
    The dollar extended gains against a basket of currencies after the jobs data, while yields on 10-year U.S. Treasuries surged to their highest since October.
    At 9:43 a.m. ET the Dow Jones industrial average was down 57.59 points, or 0.32 percent, at 17,847.99, the S&P 500 was down 6.96 points, or 0.33 percent, at 2,088.88 and the Nasdaq Composite was down 26.03 points, or 0.51 percent, at 5,033.09.
    Eight of the 10 major S&P 500 sectors were lower, with the utilities index leading losses with a 1.24 percent drop.
    The Federal Reserve Bank of New York President William Dudley speaks before the Economic Club of Minnesota in Minneapolis at 12:40 p.m. ET (1640 GMT). Investors will keep an eye on the speech for his take on the monthly jobs data.
    European shares were on track for their worst week of the year as a losing streak for bonds rumbled on and with wary investors anticipating more debt drama over Greece.
    Greece delayed a payment to the International Monetary Fund as Prime Minister Alexis Tsipras demanded changes to tough terms from international creditors for aid to stave off default. Tsipras is set to address the Greek parliament at 11:00 a.m. ET.
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