(Bloomberg) -- U.S. stocks fell from records and Treasury yields rose with the dollar after a strong monthly jobs report clouded the case for Federal Reserve rate cuts. Gold tumbled.
The S&P 500 retreated after hiring rebounded in June in a sign of labor-market strength that may ease calls for a rate cut. The 10-year Treasury yield retook 2% and two-year rates hit 1.85%. The dollar surged versus major peers. Gold dropped below $1,400 an ounce. Trading in S&P 500 stocks was 20% below the 30-day average at this time of day.
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 biggest thing it does is that it does sort of back off the idea of an imminent recession risk which I think does puts the Fed rate cut in play," Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management LLC, said. "I think the Fed should cut because the fund rate is so far out of bounds with any rates in the world and they probably should eliminate the curve inversion."
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. Gold dipped, though still headed for the longest stretch of weekly gains since 2011. 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 0.6% as of 9:47 a.m. New York time.The Stoxx Europe 600 Index sank 0.6%, 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 0.2% to $1.1262, the weakest in two weeks.The British pound fell 0.2% to $1.2557, the weakest in more than two weeks.The Japanese yen dipped 0.3% to 108.11 per dollar.
Bonds
The yield on 10-year Treasuries climbed eight basis points to 2.03%.The two-year rate jumped nine basis points to 1.85%.Germany’s 10-year yield rose one basis point to -0.39%.
Commodities
Gold futures fell 1.7% to $1,396.90 an ounce.West Texas Intermediate crude fell 0.7% to $56.91 a barrel.Iron ore sank 5.8% to $107.70 per metric ton, the largest tumble in more than two years.
--With assistance from Yakob Peterseil and Laura Curtis.
To contact the reporters on this story: Olivia Rinaldi in New York at orinaldi1@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, ;Samuel Potter at spotter33@bloomberg.net, Robert Brand
For more articles like this, please visit us at bloomberg.com
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https://finance.yahoo.com/news/asia-stocks-set-muted-start-222654611.html
2019-07-05 14:16:00Z
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