Dow Average Caps Longest Slump Since 2011 as Treasuries Rise

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U.S. stocks fell, with the Dow Jones Industrial Average headed for its longest slide since 2011, as declines in the shares of commodity- and biotechnology-related companies worsened. Longer-maturity Treasuries rose as jobs data bolstered a speculation that inflation will remain tame.

The Dow fell 0.3 percent at 4 p.m. in New York. The gauge pared declines in late trading, but still recorded a seventh straight loss. Energy and materials shares led a 0.3 percent drop in the Standard & Poor’s 500 Index. The yield on 10-year Treasury notes fell five basis points to 2.17 percent, and the dollar weakened from a four-month high.

While data showed the U.S. labor market chugged along at a pace Federal Reserve policy makers want to see in order to raise interest rates, average hourly earnings climbed less-than-forecast, indicating little momentum in wage growth. A rout in commodities from industrial metals to oil continued on signs of a slowdown in China, while selling accelerated in shares of some of the bull market’s biggest winners from biotechnology to media.

“I’m not surprised to see the market down given the downward bias we’ve seen the last couple of days,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “If anything, the report slants the bias towards a September rate hike, given the strength of the jobs numbers.”

The S&P 500 fell 1.2 percent this week amid declines among media and biotechnology shares. Commodity producers have also slumped and Apple Inc. fell into a correction. The benchmark measure is up 0.9 percent this year, trailing most developed-market gauges. The Dow lost 1.8 percent in the week, with Walt Disney Co. leading declines.

Downward bias

The gain in payrolls last month followed a 231,000 advance in June that was bigger than previously estimated, a Labor Department report showed Friday in Washington. While the data also showed a pickup in hours worked, average hourly earnings climbed a less-than-forecast 2.1 percent from a year earlier, indicating little momentum in wage growth.

While traders are pricing in a 58 percent probability that the Fed will raise rates in September, based on data compiled by Bloomberg, the tepid wage growth fueled speculation inflation remains in check.

The Treasury yield curve, a harbinger of the outlook for economic growth, narrowed to the least since April, signaling a drop in inflation expectations

The Bloomberg Dollar Spot Index slid 0.3 percent while a Bloomberg gauge of 20 emerging-market currencies fell 0.3 percent, heading for its seventh weekly loss in the longest slump since October. Russia’s ruble and Brazil’s real led declines this week, falling more than 3 percent.

Commodities Slump

The MSCI Emerging Markets Index of stocks was little changed, leaving its third weekly decline at 1.8 percent. The Stoxx Europe 600 dropped 0.9 percent, paring the gauge’s weekly gain to 0.2 percent.

Copper declined to a six-year low as an unexpected drop in German industrial production spurred concern that economic growth is slowing in Europe’s largest economy.

Oil capped its sixth weekly decline amid signs of a persistent supply surplus. U.S. crude inventories remain more than 90 million barrels above the five-year seasonal average, while output expanded last week by the most since May, government data show.

West Texas Intermediate for September delivery fell 79 cents to close at $43.87 a barrel on the New York Mercantile Exchange. It was the lowest settlement since March 17 and the second-lowest of 2015.

Brent slipped 1.8 percent to $48.61 a barrel, down 6.9 percent for the week.

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