Stocks pare losses with Dow off less than 100 points

U.S. stocks traded lower Friday after a sharp miss on the May jobs report renewed some concerns about economic growth.

The Dow Jones industrial average briefly fell more than 100 points in morning trade. Goldman Sachs and JPMorgan Chase contributed the most to declines.

Financials traded about 2 percent lower as the greatest decliner in the S&P 500. The Bank and Regional Banking ETFs traded more than 3.5 percent.

ISM non-manufacturing came in at 52.9 for May, well below April’s 55.7 print. The employment component fell to 49.7 from 53.0 in April.

Factory orders rose 1.9 percent in May.

Fed Governor Lael Brainard, a voting member of the FOMC, is scheduled to speak midday.

“I think some of the slowdown on the jobs growth reflects the slow growth we saw in the first quarter and the fourth quarter,” said Kate Warne, investment strategist at Edward Jones.

The May jobs report showed creation of 38,000 jobs, well below expectations. Analysts noted the Verizon workers’ strike likely made the number lower than it would have been.

Fed funds futures showed markets were pricing in an 8 percent chance of a June rate hike, and 33 percent in July, according to RBS. Chances for a September hike were 54 percent, and 90 percent in December, with the first full rate hike now factored in for March 2017, RBS said.

The final Markit services PMI was 51.3 in May, down from 52.8 in April and well below the post-crisis average of 55.6, Markit said.

Treasury yields were lower, with the 2-year yield near 0.8 percent and the 10-year yield around 1.71 percent as of 9:50 a.m. ET.

The U.S. dollar index traded more than 1 percent lower to hit its lowest since mid-May. The euro was near $1.131 and the yen around 107.1 yen against the greenback.

There could be two rate hikes in 2016 if data continue to be favorable but the timing of both won’t prove to be crucial, Chicago Fed President Charles Evans told CNBC earlier.

“Timing’s not really that critical for my viewpoint, as long as by the end of this year we’re at just a little under 1 percent,” Evans said.

He also said the June 23 U.K. vote on whether to leave the European Union is “a very critical decision.”

“I’m not sure it plays an important role in our policy making beyond us just monitoring the U.S. data and general global financial conditions and having confidence that things are still on a good track,” he later added.

Symbol
Name
Price
Change
%Change
DJIA Dow Industrials 17745.84
-92.72 -0.52%
S&P 500 S&P 500 Index 2091.32
-13.94 -0.66%
NASDAQ NASDAQ 4924.10
-47.26 -0.95%

Markit’s Caixin China General Services Business Activity Index fell to 51.2 in May, from 51.8 in the previous month.

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In mid-morning trade, the Dow Jones industrial average declined 91 points, or 0.51 percent, to 17,748.

The S&P 500 fell 14 points, or 0.66 percent, to 2,091.

The Nasdaq composite fell 45 points, or 0.91 percent, to 4,926.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher near 14.5.

Decliners were a touch ahead of advancers on the New York Stock Exchange, with an exchange volume of 89 million and a composite volume of 312 million in morning trade.

U.S. crude oil futures for July delivery declined 26 cents to $48.91 a barrel on the New York Mercantile Exchange.

Gold futures for August delivery jumped $29.30 to $1,241.90 an ounce as of 9:46 a.m. ET.

On tap this week:

Friday

12:30 p.m. Fed Governor Lael Brainard at Council on Foreign Relations, DC

1 p.m. Rig count

Saturday

3 a.m. Cleveland Fed President Loretta Mester

*Planner subject to change.

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