By Anora Mahmudova and Sara Sjolin, MarketWatch
Economy adds 257,000 jobs in January
NEW YORK (MarketWatch) -- U.S. stocks turned lower in choppy
trade Friday as the markets shrugged off a strong jobs report,
which had given the markets a jolt earlier in the day, and turned
to lingering concerns about Greece.
Worries about Greece were sparked midday Friday after Standard
& Poor's downgraded the country's long-term sovereign-debt
rating to B-minus from B and kept it on watch for additional
downgrades, should its prospects deteriorate. The downgrade by the
rating agency comes after the European Central Bank earlier this
week announced that it will no longer accept Greek bonds as
collateral as the Hellenic Republic's newly installed leadership is
attempting to restructure the terms of its stringent bailout
restructured in 2012.
The main indexes had been on pace to book solid weekly gains,
however. The S&P 500 (SPX) turned lower, falling 0.2%, to
2,059, with eight of its 10 main sectors trading lower. Financials
and telecoms were still in the green, while utilities led
losses.
The Dow Jones Industrial Average (DJI) gave up modest gains and
inched lower to 17,846, down 38 [points, or 0.21%, at last check,
with nearly half of its 30 members trading lower. Verizon
Communications Inc and J.P. Morgan Chase & Co were the top
gainer among the blue-chips.
The Nasdaq Composite (RIXF) moved lower, down about 5 points, or
0.1%, at 4759.5
JJ Kinahan, chief derivatives strategist at TD Ameritrade, said
that today's reverse in prices is a continuation of a trend of
taking risk off the table on Friday afternoons.
"We've had good rallies this week and investors simply do not
want to hold long position going into the weekend. And news of
Greece became a good trigger point to start selling," he added.
Brian Fenske, head of sales trading at ITG, New York-based
brokerage firm, said that downgrade of Greece caught people
off-guard.
"People have been ignoring negative news about Greece this week,
and today's downgrade is a delayed reaction that further problems
with Green can destabilize the euro," Fenske said.
"There is also concern that the market is toppy. A lot of
fundamental investors are afraid to buy stocks when earnings
estimates have come down," Fenske added.
The main focus earlier was on the key monthly jobs report, which
came in far stronger than expected.
The Labor Department report showed that the economy added
257,000 jobs in January, while November and December numbers were
revised sharply higher. Another good sign, hourly wages jumped
0.5%. Although the unemployment rate ticked up to 5.7% from 5.6%,
it suggests that more people are entering the workforce. The U.S.
economy added more than 200,000 jobs for 12 straight months.
Consistent trend in the labor market prompted investors adjust
expectations about he timing of the Federal Reserve's first rate
hike.
In the wake of the jobs report, the dollar rallied, with the
dollar index (DXY) jumping 1%, while 10-year Treasury yields rose
11 basis points to 1.94%.
The Fed policy committee is scheduled to meet on March 17-18,
with some analysts expecting a change in the tone of its monetary
policy statement.
Speaking in Naples, Florida, Atlanta Federal Reserve President
Dennis Lockhart said 'Conditions are likely to come together that
will allow the Federal Reserve to hike short-term interest rates
anytime "from June on". Jon Hilsenrath, chief economics
correspondent for The Wall Street Journal wrote that the strong
jobs report keeps open the possibility the Federal Reserve could
start raising short-term interest rates in June.
Steven Wieting, global chief investment strategist at Citi
Private Bank, said consistently higher job gains do not justify
rates at zero.
"We have now had four years of 200,000 job gains on average and
the latest trend suggest we have capacity to grow to absorb
population growth. Zero interest rates are not appropriate at this
juncture," Wieting said.
"While impending rate hikes, and we believe the Fed will raise
rates this year, bring volatility to the stock market, ultimately,
earnings growth and increased consumer spending, will drive markets
higher. The continued strength of the dollar will make U.S.
equities attractive to international investors, bringing in
investments," he added.
Friday earnings: Moody's Corp. (MCO) jumped reported
fourth-quarter earnings of $1.12 a share, beating a consensus
estimate gathered from a FactSet survey.
Madison Square Garden Co.(MSGNV) shares also rose after beating
on fourth-quarter earnings.
CBOE Holdings Inc. (CBOE) dropped as it reported earnings
slightly lower than expectations.
Movers and shakers: Twitter Inc. (TWTR) surged 16% after the
social-media company reported adjusted fourth-quarter earnings
ahead of analyst expectations.
LinkedIn Corp. (LNKD) jumped 14%, after the social-networking
company beat expectations for the fourth quarter.
GoPro Inc. (GPRO), on the other hand, slumped 11% after the
maker of wearable video cameras posted results that easily beat
expectations late Thursday, but then warned on the coming quarter
and that its chief operating officer had resigned.
Pandora Media Inc. (P) sank 18% after the music-streaming
service late Thursday reported fourth-quarter results where revenue
and the 2015 outlook missed expectations.
Online travel-services provider Expedia Inc. (EXPE) reported a
drop in fourth-quarter earnings late Thursday, sending the shares
11% lower.
Harris Corp. (HRS) and Exelis Inc. (XLS) said they have entered
into a definitive agreement, where Harris will buy the aerospace
and defense firm in a cash-and-stock deal valued at $23.75 per
share, or an approximately $4.75 billion enterprise value. Shares
of Exelis soared 35% and Harris jumped 7.5%.
Other markets: Oil futures continued to climb, setting the March
crude contract (CLH5) on track for an 6.9% weekly advance. Metals
(GCJ5) were mixed, while the dollar (DXY) fell against most major
currencies.
Europe's benchmark stock index extended gains into a fifth
straight day on Friday, after erasing losses in volatile afternoon
action on the back of stronger-than-expected U.S. jobs numbers. The
Stoxx Europe 600 ended 0.2% higher at 373.31. Asian markets closed
mixed.
Read: Greece and Germany can't even agree to disagree
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