Dollar, stocks rise after stronger-than-expected U.S. jobs data

Fri Dec 5, 2014 5:08pm EST
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By Caroline Valetkevitch

NEW YORK (Reuters) - An unusually strong U.S. jobs report lifted the dollar to a five-and-a-half-year high against a basket of currencies on Friday and drove stocks higher, led by financial shares.

U.S. bond prices dropped, pushing short-term yields to their biggest single-day rises in nearly four years as investors priced in a U.S. interest rate hike by mid-2015.

Labor Department data showed U.S. employers hired more workers in November than during any month in nearly three years. Non-farm payrolls surged by 321,000, the most since January 2012 and topping forecasts for 230,000 new jobs.

"The trend is pretty good. Now comes the second-guessing in the market," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "It brings concerns that the Fed might look to raise earlier than some people had expected. I don't think anyone should fear the Fed right now."

The Dow and S&P 500 ended at record highs and posted a seventh straight weekly advance.

Traders shifted bets on the Federal Reserve's first round of interest-rate increases to July 2015 from September 2015 before the report.

The jobs report caused the yield on U.S. 2-year Treasuries US2YT=RR to rise to its highest since May 2011, according to Reuters data. The yield curve flattened, with the differential between the five-year note and the 30-year bond falling to its lowest level since January 2009.

The benchmark 10-year Treasury note US10YT=RR was off 14/32 and yielding 2.3047 percent.   Continued...

Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange December 4, 2014. REUTERS/Remote/Stringer