Strong jobs data hurt U.S. stocks, bonds; dollar soars

Fri Mar 6, 2015 4:10pm EST
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By Richard Leong

NEW YORK (Reuters) - A robust U.S. jobs report raised concern in markets on Friday that the Federal Reserve may raise interest rates sooner than previously thought, hammering U.S. stock and bond prices.

News the U.S. unemployment rate hit a 6-1/2-year low in February fed into the dollar's winning streak, propelling it to a fresh 11-1/2-year peak against a group of currencies and a similar high against the euro.

The greenback's gains hurt oil and gold, whose prices are set against the U.S. currency.

"Any sign of undue strength will raise the specter of rates climbing sooner than expected, and we were already expecting rates to rise this year," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.

Wall Street stocks and U.S. Treasuries have scored strong gains in large part due to the Fed's ultra-loose monetary policy to combat the recent recession and global credit crisis.

The U.S. Labor Department said employers added 295,000 workers in February, beating a forecast of 240,000. It was the longest run of 200,000-plus increases since 1994. The jobless rate dropped to 5.5 percent from 5.7 percent in January.

U.S. interest rates futures suggested traders had placed more bets the Fed might raise rates this summer, but they have not fully priced in such a move until late 2015.

The Dow Jones industrial average .DJI tumbled 277.97 points, or 1.53 percent, to 17,857.75, the S&P 500 .SPX dropped 29.75 points, or 1.42 percent, to 2,071.29 and the Nasdaq Composite .IXIC lost 55.44 points, or 1.11 percent, to 4,927.37. [.N]   Continued...

Traders work on the floor of the New York Stock Exchange March 5, 2015. REUTERS/Brendan McDermid