U.S. stock indexes moved lower in late-afternoon trading Friday following a government report showing that hiring slowed sharply in May. Banks and other financial companies were the biggest decliners as traders anticipated that the downbeat jobs data would prompt the Federal Reserve to keep interest rates low longer than expected.
The dollar fell sharply against most major currencies, while bond prices surged as investors sought safety in U.S. government-backed debt.
ON WALL STREET: The Dow Jones industrial average fell 32 points, or 0.2 percent, to 17,805. The Standard & Poor’s 500 index shed five points, or 0.3 percent, to 2,099. The Nasdaq composite index lost 26 points, or 0.5 percent, to 4,944.
OIL PRICES: Benchmark U.S. crude oil fell 55 cents, or 1.1 percent, to close at $48.62 a barrel in New York. Brent crude, which is used to price international oils, slid 40 cents, or 0.8 percent, to close at $49.64 a barrel in London. In other energy futures trading, natural gas dropped 1 cent to close at $2.398 per 1,000 cubic feet. Wholesale gasoline slid 3 cents, or 1.7 percent, to close at $1.61 a gallon. Heating oil shed 2 cents, or 1.4 percent, to close at $1.49 a gallon.
JOBS REPORT: The Labor Department reported that the U.S. economy added only 38,000 jobs in May, the lowest amount in five years. The unemployment rate fell to 4.7 percent from 5 percent, but mainly because about half a million unemployed people stopped looking for work. Separate reports out Friday also showed a mixed snapshot of the economy. The Institute of Supply Management said U.S. services firms grew in May at the slowest pace in more than two years, while the Commerce Department said orders to U.S. factories rose in April by the largest amount in six months.
ANALYST’S OPINION: The jobs report is likely to push the Federal Reserve to hold off raising its key interest rate any time soon, said analyst Terry DuFrene, global investment specialist at J.P. Morgan Private Bank.
“It certainly takes off the table any kind of chance of a rate movement at all in the month of June,” DuFrene said. “Now that’s got to be pushed out until maybe the early fall before there’s any sort of rate movement at all.”
FINANCIALS STUMBLE: Several banks and financial services companies fell amid speculation that the Fed will opt not to raise its benchmark interest rate. Lower interest rates make it harder for banks to make money from loans. E-Trade Financial slumped $1.47, or 5.2 percent, to $26.66, while Charles Schwab lost $1.70, or 5.5 percent, to $29.14. Citigroup fell $1.89, or 4 percent, to $45.08.
GOLD RUSH: Mining companies were among the biggest gainers as the price of gold, silver and copper surged. Newmont Mining gained $2.66, or 8.2 percent, to $35.01, while Freeport-McMoRan added 35 cents, or 3.3 percent, to $11.01.