Wall St slips as jobs report disappoints slightly

US stocks edged lower after a slightly worse than expected jobs report, falling oil prices and sterling weakness.

US stocks slipped as oil declined. Picture: AP Photo/Richard Drew.

US stocks slipped Friday after a slightly weaker-than-expected jobs report.

The Dow Jones Industrial Average declined 0.15 per cent and the Nasdaq Composite shed 0.3 per cent. The S&P 500 fell 0.3 per cent Friday, leaving it down 0.7 per cent for the week.

Steady dividend-paying stocks led the declines, as more investors warmed to the idea that higher interest rates are likely before the end of the year.

“The highest yielding sectors and stocks were getting pricey, and it’s not too surprising we’re seeing money move out of where prices were too good and into more attractively valued stocks and sectors,” said Kate Warne, investment strategist at retail brokerage Edward Jones.

For the week, the S&P 500 utilities sector fell 3.8 per cent. The yield on the 10-year Treasury note rose to its highest level in more than four months on Thursday. On Friday, it ticked lower to 1.734 per cent from 1.741 per cent on Thursday.

The Labor Department said Friday the US economy added 156,000 jobs in September. That fell slightly below expectations, but many analysts said it wasn’t weak enough to challenge the prevailing narrative that the US Federal Reserve will raise short-term interest rates by December.

Federal funds futures, used by investors to place bets on central-bank policy, showed a roughly 66 per cent chance of a rate increase by year-end, little changed from the previous day’s 63 per cent, according to CME Group data.

The price of US-traded oil rose above $US50 a barrel to its highest level since June on Thursday. On Friday, oil dropped 1.2 per cent to $US49.81 a barrel after comments from the Russian energy minister damped hopes for a broader agreement on production cuts.

Commodity-linked materials and industrials companies were the biggest decliners Friday. Traders said the move lower wasn’t unexpected because of the general lack of conviction around oil’s recent gains.

“The narrative is decidedly bearish that oil is going to collapse back down,” said Kent Engelke, chief economic strategist at Capitol Securities Management.

The last time US-traded crude oil ended a week at or above $US50 a barrel was on July 17, 2015, when it ended at $US50.89 a barrel. The following week oil fell $US3.07, or 6 per cent.

Ahead of the US stock market open, markets had been jittery after sharp swings in sterling. Sterling was volatile in European trading. It had dropped to as low as $US1.1819 during early Asian trading hours in just minutes.

Market participants said the decline in the pound was accelerated by computerised trades at a time of low liquidity, as the pound broke through levels that likely triggered automatic sell orders. A recent increase in algorithmic trading and declining participation of investment banks in the market contributed to the volatility, analysts said, pointing to similarities with previous swift drops in currency markets earlier this summer.

“There is no logical fundamental justification to explain such an extreme move,” said Derek Halpenny, strategist at Bank of Tokyo-Mitsubishi UFJ. Still, he said, it no doubt will add considerably to the negative sentiment around the British currency.

The Stoxx Europe 600 index fell 0.9 per cent. London’s export-heavy FTSE 100 index, which tends to move counter to the British currency, rose 0.6 per cent, among the only European stock markets in positive territory.

The sell-off in sterling followed a week of headlines that brought the UK’s pending exit from the European Union back into focus. British Prime Minister Theresa May announced a date to begin the UK’s divorce process from the EU on Sunday.

Japan’s Nikkei Stock Average fell 0.2 per cent, while shares in Hong Kong fell 0.4 per cent and shares in Australia fell 0.3 per cent.

Markets in China were closed for a holiday.

Dow Jones