US: Wall St ends lower as jobs data may bring rate hike sooner

[NEW YORK] US stocks closed lower on Friday and the S&P 500 declined for a second straight week after a strong monthly jobs report as investors bet that the Federal Reserve could raise interest rates sooner than previously expected.

Some of the worst-hit stocks were utilities and real estate investment trusts as they are high-yielding investments which would look less attractive after a rate hike.

The S&P and the Dow, which accelerated their declines as the day wore on, were under additional pressure because they had hit records earlier in the week after a strong February.

US nonfarm payrolls rose 295,000 last month, topping estimates for a gain of 240,000, after a downwardly revised 239,000 increase in January. The unemployment rate fell to 5.5 per cent from 5.7 per cent in January.

The strong report, seen as a gauge for the timing of the Fed's first rate hike in years, may put pressure on the Fed to move soon, said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas. "You have to think that report makes the likelihood of a June rate increase somewhat higher," said Mr Frederick.

The S&P extended its losses as the session wore on having found little support after it fell below its two-week intraday low, according to Frank Cappelleri, technical market analyst at Instinet, a Nomura company, in New York.

The Dow Jones industrial average fell 278.94 points, or 1.54 per cent, to 17,856.78, the S&P 500 lost 29.78 points, or 1.42 per cent, to 2,071.26 and the Nasdaq Composite dropped 55.44 points, or 1.11 per cent, to 4,927.37.

For the week, the S&P 500 fell 1.6 per cent while the Dow slid 1.5 per cent and the Nasdaq dropped 0.7 per cent. The S&P and the Dow both ended the day more than 2 per cent lower than their March 2 records. The S&P saw its biggest percentage decline since early January on Friday.

In a shakeup of the Dow Jones industrial average, Apple Inc , the largest US company by market value, will join the index this month, replacing AT&T Inc. Apple shares rose 0.15 per cent at US$126.60 after rising as high as US$129.37 while AT&T fell 1.5 per cent to US$33.48. "If anything, what that should do is cause the Dow to be more volatile," said Schwab's Frederick, because the Dow is a price-weighted index and Apple has a higher share price than AT&T.

The utilities sector was the worst performing S&P 500 sector with a 3.1 per cent decline and the Dow Jones Equity Reit Index finished off 3.2 per cent.

About 7.2 billion shares changed hands on US exchanges, compared with the 6.4 billion average for the last five sessions, according to data from BATS Global Markets.

Declining issues outnumbered advancing ones on the NYSE by 2,683 to 438, for a 6.13-to-1 ratio on the downside; on the Nasdaq, 1,926 issues fell and 840 advanced for a 2.29-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 13 new 52-week highs and four new lows; the Nasdaq Composite recorded 67 new highs and 47 new lows.

REUTERS