Stocks Drop as Gold Rises After Disappointing Jobs Report

(Corrects to remove reference to Swiss franc breaching SNB ceiling in 11th paragraph.)

U.S. stocks fell, extending losses from the Standard & Poor’s 500 Index’s worst week of 2012, while yields on 10-year Treasuries slipped and gold rose as job creation in the world’s biggest economy trailed estimates.

The S&P 500 lost 1.1 percent to 1,382.20 at 4 p.m. New York time. Treasury 10-year yields slipped as much as four basis points to a one-month low of 2.02 percent. Gold futures added 0.8 percent to $1,643.90 an ounce. The euro reversed losses, climbing 0.1 percent to $1.3113. Copper futures slumped to the lowest level since Feb. 17.

U.S. employers added 85,000 fewer jobs in March than economists projected, the biggest shortfall since the report released on July 8, according to data compiled by Bloomberg. The Labor Department’s April 6 statement spurred concern about the pace of American growth after improving economic data helped fuel a 12 percent first-quarter rally in the S&P 500 (SPX), the best annual start since 1998. The index lost 0.7 percent last week.

“The economy does continue to grow, but slowly,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “That’s been the source of frustration for a lot of investors, that we haven’t had the big forward movement in the economy like we have in the past.”

All western European stock markets were shut for holidays, along with Australia, New Zealand, Hong Kong, Thailand and South Africa. U.S. markets were closed on April 6, when the monthly report from the Labor Department was released. The MSCI Asia Pacific Index (MXAP) of shares in the region fell 0.6 percent today.

Overcoming Jobs

The U.S. jobs report presents a challenge that stocks have overcome nine times during the bull market that drove the S&P 500 up more than 100 percent in three years. While the S&P 500 averaged losses of 0.8 percent in the day after the data missed projections by at least 85,000 since March 2009, the benchmark gauge cut its decline in half a week later and was up 0.9 percent after two weeks, the data show.

Alcoa Inc. (AA) slipped 0.3 percent. The aluminum producer is scheduled to disclose first-quarter results tomorrow, the first Dow Jones Industrial Average company to report. AOL Inc. (AOL) surged 43 percent, the most since it was spun off from Time Warner Inc. in 2009, after agreeing to sell and license patents to Microsoft Corp. in a deal valued at $1.06 billion.

The Shanghai Composite Index (SHCOMP) slid 0.9 percent. China’s consumer prices rose 3.6 percent in March from a year earlier, the government said. That compared with the 3.4 percent median estimate in a Bloomberg survey of economists and a 3.2 percent gain the previous month. The one-year swap rate rose five basis points to 3.195 percent.

‘High and Disappointing’

“The CPI number is very high and disappointing,” said Ju Wang, a rates strategist at Barclays Plc in Singapore. “It’s bad for sentiment as it may delay a reserve requirement cut.” Barclays has predicted a reduction this month.

Treasuries rose, driving yields lower, as investors sought the safety of U.S. debt amid concern about the economy. Investors prepared to bid at three sales of coupon-bearing debt totaling $66 billion starting tomorrow.

While gold futures advanced, the S&P GSCI Index of 24 raw materials retreated 0.6 percent. Copper in New York fell to $3.705 a pound, the lowest level since Feb. 17.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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