Stocks lower on jobs, with Dow off 150 points; Apple to join blue chips

March 6, 2015 | Evelyn Cheng, NBR, CNBC.com

U.S. stocks traded lower on Friday amid corporate news, as investors digested February’s jobs report that indicated an interest rate hike could come sooner rather than later.

Apple is expected to join the Dow Jones industrial average on March 18, replacing AT&T. Shares of the iPhone maker gained about 2 percent to trade below recent highs, while the wireless services provider fell more than 1 percent.

It’s “good news,” said Kate Warne, investment strategist at Edward Jones. “The Dow should react well, but move a lot different than we’re used to.”

“It is a major change. It has been discussed everywhere,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “Obviously it’s going to be a positive item. It represents the market that we’re trying to imitate better than AT&T.”

The Dow fell more than 150 points, down about 0.9 percent below 18,000.

The S&P 500 opened down 9 points, or 0.43 percent, at 2,091, with utilities leading eight sectors lower and financials the greatest advancer.

The Nasdaq traded down 3 points, or 0.07 percent, to 4,979.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.

The jobs report showed a gain of 295,000, above expectations of 240,000 in February, down from 257,000 in January. The unemployment rate fell to 5.5 percent, while hourly wages ticked up 0.1 percent, below consensus and off the surprise 0.5 percent gain in January.

Read More Surge! Job creation jumps despite tough winter

“It’s wages they’re concerned about. Average hourly earnings can’t get lift off here,” said John Canally, strategist and economist at LPL Financial. He doesn’t see the Fed hiking until wage gains strengthen.

“The labor market is tightening but it’s not tightening enough to push average hourly earnings,” he said.

Bond yields rose, with the U.S. 10-year Treasury note yield at 2.23 percent and the 2-year surging to 0.72 percent, on increased anticipation of an interest rate hike sooner rather than later.

The U.S. dollar rose more than 1 percent against major world currencies. On the other hand, the euro breached $1.09 after the report, extending Thursday’s decline from quantitative easing news in the euro zone.

“I think a 5.5 percent unemployment rate clinches a June rate hike. which means ‘patient’ comes out in a week and a half,” said Peter Boockvar, chief market analyst at The Lindsey Group.

“I don’t really think much of it. I would have liked to see something more dramatic in one direction or another. I think the economy is flattening out. People can look at it and pull anything they want. Labor force participation seems stuck.”said Gary Chaison, professor at industrial relations at Clark University.

However, he said “I think this will give some encouragement to the Fed to act next month (which is thinking) we have to get here. We have to jump start the system.”

Trade balance data for January showed $41.75 billion, a decrease from December’s $45.60 billion.

Consumer credit comes at 3:00 p.m. ET.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17957.34
-178.38 -0.98%
S&P 500 S&P 500 Index 2082.88
-18.16 -0.86%
NASDAQ Nasdaq Composite Index 4951.44
-31.37 -0.63%

Three stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 201 million and a composite volume of 888 million in morning trade.

Crude oil traded near $50 a barrel, while gold fell to $1,176 an ounce.

Staples reported a 3.7 percent fall in quarterly sales, as a strong dollar and waning demand for computers and accessories hurt profits.

The office supply retailer posted a net loss attributable to the company of $260.4 million, including a pre-tax charge of $410 million as a result of impairment of goodwill in its international operations. Shares in the firm dipped in pre-market trading.

On Thursday, the European Central Bank announced will start its 1 trillion euro ($1.1 trillion) bond-buying program on Monday, March 9, with expectations to end in September 2016, President Mario Draghi said during a press conference

Draghi also raised regional growth forecasts for 2015 and 2016 to 1.5 percent and 1.9 percent, respectively.

Read More Don’tbe too patient on rate hikes: Fed’s Williams

President and CEO of the Federal Reserve Bank of San Francisco, John Williams, said he believed the federal funds rate should be lifted before inflation reached the Fed’s preferred 2 percent goal in a speech delivered in Honolulu Thursday.

Dallas Fed President Richard Fisher is also due to speak on the state of the economy in Dallas later on Friday.

European equities were mostly flat in morning trade on Friday as investors looked ahead to the release of jobs data in the U.S. and reacted to a drop in metal prices.

As of its close on Thursday, the S&P 500 was within 1.5 standard deviations of its 50-moving day average. Since 1980 the index has been in this position 8.31 percent of all trading days, according to quantitative analytics tool Kensho.The probability of the index moving lower in the days following is 54.8 percent and the probability of it moving higher is 45.2 percent.

As of its Thursday close, the Dow Jones industrial average was within 1.5 standard deviations of its 50-moving day average. Since 1981 the index has been in this position 8.36 percent of all trading days, according to Kensho. The probability of the index moving lower in the days following is 60.5 percent and the probability of it moving higher is 39.5 percent.

The Nasdaq Composite was within 2 standard deviations of its 50-day moving average, as of its close on Thursday. Since 1980 the index has been in this position for 9.28 percent of all trading days, Kensho data showed. The probability of the index moving lower in the days following is 75.7 percent and the probability of it moving higher is 24.3 percent.

Disclosure: CNBC’s parent NBCUniversal is a minority investor in Kensho.