U.S. Stocks Give Up Gains As Dividend Stocks Sink
NEW YORK (AP) — Stocks turned lower in afternoon trading Friday, despite a report that showed robust growth in U.S. jobs and wages last month. The market is still on pace for the best week in several months.
Prices of ultra-safe U.S. bonds fell, boosting their yields, as investors speculated that the blowout employment report increased the likelihood that the Federal Reserve would raise interest rates by midyear. Utility stocks sank as higher bond yields made dividend-paying stocks less attractive.
KEEPING SCORE: The Dow Jones industrial average was down 35 points, or 0.2 percent, to 17,853 as of 1:47 p.m. Eastern time. The Standard & Poor's 500 index fell a point, or 0.1 percent, to 2,061. The Nasdaq composite lost 10 points, or 0.2 percent, to 4,754.
The Dow is up 4 percent this week, on track for its biggest weekly gain since 2011, while the S&P 500 is up 3.3 percent, which would be its best week since October.
JOBS, JOBS, JOBS: U.S. employers added 257,000 jobs in January and wages jumped by the most in six years, evidence that the job market is closer to full health. The gain was far better than the 230,000 jobs economists had expected.
Adding to the strong report were revisions that showed hiring was far stronger in November and December than previously estimated. Workers' wages, which have been mostly stagnant since the recession, rose at the fastest pace since 2008.
"The January employment report was strong across the board," said Michelle Girard, an economy at RBS Securities, in a note to clients. "While benchmark and seasonal factor revisions affect many of the month-to-month changes, even looking through that noise, the data were clearly very healthy."
RETREATING FROM SAFETY: Investors pulled out of bonds and gold, traditional havens in times of uncertainty. As bond prices fell, the yield on the 10-year Treasury note jumped to 1.93 percent from 1.81 percent. Gold fell 2 percent to $1,236 an ounce.
When times are good, it makes little sense to be invested in "safe" assets because they tend to underperform the broader market. The Dow Jones utility index, a collection of power company stocks, slid nearly 3 percent.
"It's much more difficult to justify these high prices for utility stocks with yields rising like this," said Russ Koesterich, global chief investment strategist at BlackRock.
GREECE MEETING: Greece remains a concern for investors as the new government there tries to forge a deal on the country's debts with its partners in the 19-country eurozone.
The finance ministers of the eurozone's member countries will hold a meeting next Wednesday to discuss Greece's debts. The Athens stock index fell 2 percent Friday as investors worried about the outcome of the talks.
TAKING FLIGHT: Twitter rose $6.90, or 17 percent, to $48.17 after the company reported revenue that beat analysts' expectations.
PLAYING OFFENSE: Military contractor Harris rose $5.41, or 8 percent, to $74.85 after announcing it would buy competitor Exelis for $4.4 billion. Exelis jumped 35 percent to 23.91 a share, a sign that investors believe the move could spark a bidding war for the company.
OIL REBOUND: Oil prices extended their gains Friday, as benchmark U.S. crude rose $1.12 a barrel to $51.62. Brent, the international standard, was up $1.60 at $58.19 a barrel.
– by AP Reporter Ken Sweet