US stocks open lower as strong jobs report raises prospect of summer rate hike; dollar jumps

Markets Associated Press

Stocks opened lower on Friday as another strong U.S. jobs report raised the likelihood that the Federal Reserve would start to raise interest rates later this year. The dollar jumped and U.S. government bond prices fell after the report.

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KEEPING SCORE: The Standard & Poor's 500 index fell seven points, or 0.4 percent, to 2,093 as of 10:03 a.m. Eastern. The Dow Jones industrial average dropped 81 points, or 0.5 percent, to 18,054. The Nasdaq composite fell six points, or 0.1 percent, to 4,976.

MORE JOBS: U.S. employers extended a healthy streak of hiring in February by adding 295,000 jobs, the 12th straight monthly gain above 200,000. The Labor Department said Friday that the unemployment rate fell to 5.5 percent from 5.7 percent. Still, the strong job gains weren't enough to boost wages by much. The average hourly wage rose just 3 cents in February to $24.78 an hour.

ANALYST TAKE: The strong hiring report will likely fuel speculation that the Federal Reserve will raise interest rates as early as June. Last week Fed Chair Janet Yellen indicated that a summer hike was possible, while leaving the door open to a later increase. "All things considered I think this is a very good labor market report and will only feed into expectations for a rate hike from the Fed in June," said Craig Erlam, senior market analyst at OANDA. "The rally in the dollar immediately after the release clearly supports this view."

THE BIGGEST LOSERS: The yield on the 10-year Treasury note jumped to 2.20 percent from 2.12 percent late Thursday, as investors factored in a higher probability of a summer rate hike.

Stocks that pay rich dividends, such as utilities, telecommunication companies and real estate Investment companies, slumped the most. These stocks have been popular while interest rates on bonds have remained low. If interest rates on bonds rise, they become less attractive by comparison.

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EUROPE'S DAY: In Europe, Germany's DAX rose 0.3 percent while the CAC-40 in France was flat. The FTSE 100 index of leading British shares fell 0.5 percent.

DOLLAR SPIKES: The dollar was the main mover after the release of the job figures as traders priced in an earlier rate hike. The euro, already at 12-year lows, slid 1.5 percent to $1.0856 while the dollar rose 0.8 percent to 121.13 yen.

ENERGY: Benchmark U.S. crude was down 40 cents to $50.34 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, was down 12 cents to $60.36 a barrel in London.