Stocks Waver, Yields Climb After Jobs Report
By Joe Wallace and Karen Langley
U.S. stocks swung between gains and losses in a wild trading
session Friday after February's stronger-than-expected employment
report helped government bond yields extend their recent surge.
The S&P 500 edged up 0.7% in afternoon trading, while the
Dow Jones Industrial Average rose 0.8%, or about 230 points. The
technology-heavy Nasdaq Composite added 0.1%.
The S&P 500 was poised to end the week with a modest loss,
while the Nasdaq was on course for a decline of about 4%. It would
be the third consecutive week of declines for both stock
"This last week has been a classic correction in growth versus
value," said Tom Plumb, president and portfolio manager at Plumb
Funds. "But it doesn't mean that it portends something much
The February report showed the economy added 379,000 new jobs
last month, ahead of estimates of 210,000. The unemployment rate
was 6.2%, versus the consensus of 6.3%. Those figures add to signs
of a slow improvement in the labor market, after data on Thursday
showed filings for unemployment benefits reached their lowest level
in three months.
In a sign of the recent choppy trading in equities, futures
wobbled with the jobs report's release, giving up their gains
before again trading higher. Stocks then advanced after the opening
bell before giving up those gains and then swinging several times
between gains and losses.
"There's volatility to be expected, especially after we've had a
bit of a selloff, a bit of a rocky week," said Cliff Hodge, chief
investment officer at Cornerstone Wealth. "It's not surprising that
we're bouncing around. People are looking for direction."
Stocks have stumbled in recent weeks as a climb in bond yields
has called into question whether low interest rates, which
propelled valuations higher for much of the past year, can continue
for much longer. Yields, which rise as bond prices fall, have
rallied in response to expectations of a quickening pace of growth
and inflation as the economy reopens from the coronavirus
The yield on the 10-year U.S. Treasury note rose again Friday to
1.582%, from 1.547% Thursday. That marked the highest level for the
benchmark borrowing cost since February of last year. The recent
climb in yields came after Federal Reserve Chairman Jerome Powell
provided no sign the central bank would seek to stem the rise when
he spoke at The Wall Street Journal Jobs Summit.
"It is all about the bond-yield moves. It is all about Jerome
Powell," said Edward Park, chief investment officer at Brooks
Macdonald. "There is a huge amount of uncertainty in the market at
the moment as to whether the inflation that is widely expected in
the short term is transient or whether it is more sustained."
Bond yields are likely to keep rising and stocks may remain
jittery unless the Fed takes concrete steps to put a cap on yields,
according to Mr. Park. "Markets are at their most volatile when
they are not sure how monetary policy and fiscal policy is going to
The jobs report may not sway bond yields much because the data
are unlikely to affect the progress of the Biden administration's
stimulus package through the Senate, said Lyn Graham-Taylor, senior
rates strategist at Rabobank. The Senate on Thursday advanced the
$1.9 trillion bill after making a series of adjustments, and is
expected to give its approval within days.
Yields are likely to keep heading higher, according to Mr.
Graham-Taylor. "So far the Fed's emphasized that it's not loving
it, but it is pretty comfortable with it," he said. "In the back of
their minds, it is natural for yields to rise a bit: We're not in
the eye of the storm as we were."
Technology stocks have borne the brunt of the shift in sentiment
in recent weeks. The Nasdaq Composite Index, a closely watched
barometer for the sector, on Thursday fell to its lowest level
since Jan. 4. The index ended the day down 9.7% from its Feb. 12
high, putting it just short of correction territory.
Among individual stocks Friday, shares of Gap rose 5.5%.
Executives at the firm late Thursday predicted a rebound in apparel
sales in the second half of the year after a difficult 2020.
Norwegian Cruise Line Holdings dropped 15% after the cruise
operator said it started a public stock offering.
Shares of energy companies including Exxon Mobil and Occidental
Petroleum received a boost from rising oil prices after an
unexpected decision by OPEC and its partners to roll over
production cuts in April.
Oil prices rallied for a second day after OPEC and a Russia-led
coalition of oil producers kept most of their production cuts in
place, taking the market by surprise. Brent-crude futures rose 3.1%
to $68.80 a barrel. The cartel's decision will push the
international energy benchmark to $75 a barrel in the second
quarter and $80 in the third, analysts at Goldman Sachs Group
Overseas, the pan-continental Stoxx Europe 600 ticked down 0.8%.
Major Asian indexes also declined. Japan's Nikkei 225 ticked 0.2%
lower, while Hong Kong's Hang Seng Index dropped 0.5%.
Write to Joe Wallace at Joe.Wallace@wsj.com and Karen Langley at
(END) Dow Jones Newswires
March 05, 2021 13:11 ET (18:11 GMT)
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