Safe-play stocks, bonds, and gold sink after hiring surge
New York (Feb 7) "Safety" wasn't safe Friday. A blockbuster U.S. jobs report sent investors fleeing their traditional places of comfort: dividend-paying stocks, as well as bonds and gold. The selling left major indexes slightly lower.
When nervous investors crowd into safe-haven assets, it's known on Wall Street as a "flight to safety." But this was a flight from safety, as investors grew more confident that the economy would grow.
Gold fell more than 2 percent. The yield on the 10-year Treasury jumped to 1.95 percent from 1.81 percent as investors sold the ultrasafe investment.
Utility stocks, one of the best-performing parts of the market over the last year, took a beating. The Dow Jones utility index, a collection of 15 companies, had its worst day since August 2011, plunging 4 percent.
U.S. employers added 257,000 jobs last month and wages jumped by the most in six years. The gains were far better than many economists expected.
The Dow Jones industrial average fell 60.59 points, or 0.34 percent, to 17,824.29. The Standard & Poor's 500 index lost 7.05 points, or 0.34 percent, to 2,055.47, and the Nasdaq composite fell 20.70 points, or 0.43 percent, to 4,744.40.
Unlike their counterparts in Europe and Asia, who are lowering interest rates, U.S. central bankers could lift rates as soon as June.
The current near-zero interest rates have been a key factor driving the stock market's dramatic rise since March 2009. By keeping rates low, the Fed has made bonds appear more expensive than stocks. If interest rates rise, a richly priced stock market would tend to be less attractive to investors, strategists say.
U.S. crude oil rose $1.21 a barrel, or 2.4 percent, to close at $51.69 a barrel. The jobs report suggested to investors that demand for fuels could rise. Brent, the international standard, gained $1.23, or 2.2 percent, to end at $57.80 a barrel in London.
In other metals trading, silver fell 50 cents, or 2.9 percent, to $16.69 an ounce and copper fell a penny to $2.59 a pound.
Natural gas fell 2.1 cents to close at $2.58 per 1,000 cubic feet. It was the eighth down day for natural gas out of the last nine, pushing it to its lowest level since June 2012.