US stocks drop after solid jobs report suggests higher rates

Friday, August 7, 2015, Vol. 39, No. 32

NEW YORK (AP) — U.S. stocks fell Friday after a solid jobs report kept alive the possibly that the Federal Reserve may raise interest rates as soon as next month.

It was the seventh straight day of declines for the Dow Jones industrial average. That's the longest losing streak for the index since July 2011, when investors were worried that the U.S. would slip back into recession.

Stocks started the day lower after the report was released and stayed there throughout the day. Fed policy makers have held rates at close to zero for more than six years to stimulate the economy after the Great Recession. The low rates have been good for the stock market, helping fuel a bull-market run that has lasted since March, 2009.

U.S. employers added 215,000 jobs in July, the Labor Department said Friday, another signal that the job market is steadily improving and providing another key piece of data for the Fed as it assesses whether the U.S. economy can withstand higher interest rates.

While the number was slightly below the 225,000 jobs Wall Street economists were forecasting, traders said the data was still good enough to show that the U.S. economy is continuing to improve.

"Today's number was not weak enough to dissuade the Fed," said Jurrien Timmer, director of global macro at Fidelity Investments, who predicts that the Fed will raise rates for the first time since 2006 in September.

The Dow lost 46.37 points, or 0.3 percent, to 17,373.38. The index is now down 2.5 percent for the year, and is about 5 percent below its record close of 18,312.39 set May 19.

The Standard & Poor's 500 index fell 5.99 points, or 0.3 percent, to 2,077.57 and the Nasdaq composite fell 12.90 points, or 0.3 percent, to 5,043.54.

Among individual stocks, American Express was a big mover.

The credit card company jumped $4.72, or 6.3 percent, to $79.72 after Bloomberg reported that activist investors ValueAct Capital Management had amassed a $1 billion stake in the company and would press for changes there that would benefit investors.

In bond trading, yields on two- and three-year Treasury notes rose immediately after the jobs report was published.

The yield on the two-year note climbed to 0.72 percent from 0.69 percent on Thursday. It was as low as 0.41 percent in January. Shorter-dated Treasuries would be most affected by the Fed raising rates.

The yield on the 10-year Treasury note fell to 2.17 percent from 2.23 percent a day earlier.

In currency trading, the dollar fell against the euro and the yen. The euro rose to 1.096 and the dollar dropped to 124.23 yen.

In other markets, the price of oil fell for the sixth trading day out of the last seven as the number of rigs operating in the U.S. rose, reinforcing expectations that a global supply glut will persist.

U.S. crude fell 79 cents to close at $43.87 a barrel in New York, nearing a six-year low of $43.46 set on March 17. For the week, crude fell 7 percent. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 91 cents Friday to close at $48.61 in London.

The slump in crude helped push energy stocks lower again. The sector is down 16 percent this year, making it the worst performer in the S&P 500.

In other energy futures trading, wholesale gasoline fell 2.5 cents to close at $1.623 a gallon. Heating oil fell 0.6 cents to close at $1.544 a gallon. Natural gas fell 1.5 cents to close at $2.798 per 1,000 cubic feet.

In metals trading, the price of gold rose $4 to $1,094.10 an ounce. Silver climbed 14.4 cents to $14.82 an ounce. Copper fell 0.8 cents to $2.33 a pound.