Bloomberg News

Stocks Drop as Gold Rises After Disappointing Jobs Report

April 09, 2012

Traders work on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg

Traders work on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg

U.S. stocks fell, extending losses from the Standard & Poor’s 500 Index’s worst week of 2012, while yields on 10-year Treasuries slipped and gold rose as job creation in the world’s biggest economy trailed estimates.

The S&P 500 lost 1.1 percent to 1,382.20 at 4 p.m. New York time. Treasury 10-year yields slipped as much as four basis points to a one-month low of 2.02 percent. Gold futures added 0.8 percent to $1,643.90 an ounce. The euro reversed losses, climbing 0.1 percent to $1.3113. Copper futures slumped to the lowest level since Feb. 17.

U.S. employers added 85,000 fewer jobs in March than economists projected, the biggest shortfall since the report released on July 8, according to data compiled by Bloomberg. The Labor Department’s April 6 statement spurred concern about the pace of American growth after improving economic data helped fuel a 12 percent first-quarter rally in the S&P 500 (SPX), the best annual start since 1998. The index lost 0.7 percent last week.

“The economy does continue to grow, but slowly,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “That’s been the source of frustration for a lot of investors, that we haven’t had the big forward movement in the economy like we have in the past.”

All western European stock markets were shut for holidays, along with Australia, New Zealand, Hong Kong, Thailand and South Africa. U.S. markets were closed on April 6, when the monthly report from the Labor Department was released. The MSCI Asia Pacific Index (MXAP) of shares in the region fell 0.6 percent today.

Overcoming Jobs

The U.S. jobs report presents a challenge that stocks have overcome nine times during the bull market that drove the S&P 500 up more than 100 percent in three years. While the S&P 500 averaged losses of 0.8 percent in the day after the data missed projections by at least 85,000 since March 2009, the benchmark gauge cut its decline in half a week later and was up 0.9 percent after two weeks, the data show.

Alcoa Inc. (AA:US) slipped 0.3 percent. The aluminum producer is scheduled to disclose first-quarter results tomorrow, the first Dow Jones Industrial Average company to report. AOL Inc. (AOL:US) surged 43 percent, the most since it was spun off from Time Warner Inc. in 2009, after agreeing to sell and license patents to Microsoft Corp. in a deal valued at $1.06 billion.

The Shanghai Composite Index (SHCOMP) slid 0.9 percent. China’s consumer prices rose 3.6 percent in March from a year earlier, the government said. That compared with the 3.4 percent median estimate in a Bloomberg survey of economists and a 3.2 percent gain the previous month. The one-year swap rate rose five basis points to 3.195 percent.

‘High and Disappointing’

“The CPI number is very high and disappointing,” said Ju Wang, a rates strategist at Barclays Plc in Singapore. “It’s bad for sentiment as it may delay a reserve requirement cut.” Barclays has predicted a reduction this month.

Treasuries rose, driving yields lower, as investors sought the safety of U.S. debt amid concern about the economy. Investors prepared to bid at three sales of coupon-bearing debt totaling $66 billion starting tomorrow.

The Swiss franc breached the 1.20 limit versus the euro early in Asian trading today, the second time the barrier has been crossed since Switzerland’s central bank introduced the currency cap on Sept. 6.

While gold futures advanced, the S&P GSCI Index of 24 raw materials retreated 0.6 percent. Copper in New York fell to $3.705 a pound, the lowest level since Feb. 17.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

Traders work on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg Alcoa Inc. employee Clarence Benjamin pushes a crucible of molten aluminum into place for transport at the company's Mt. Holly production plant in Goose Creek, South Carolina on Jan. 19, 2012. The aluminum producer is scheduled to disclose first-quarter results on April 10, 2012, the first Dow Jones Industrial Average company to report. Photographer: Stephen Morton/Bloomberg A gold bar is weighed at Bullion Trading LLC in New York. Photographer: Victor J. Blue/ Bloomberg April 9 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. U.S. stocks fell, dragging the Standard Poor’s 500 Index lower following its worst week of 2012, after employers added fewer jobs than forecast in March. (Source: Bloomberg) April 9 (Bloomberg) -- Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., talks about the U.S. economy, stock market and investment strategy. El-Erian, speaking with Betty Liu, Dominic Chu and Sara Eisen on Bloomberg Television's "In the Loop," also discusses China's economic outlook. Todd Horwitz, chief strategist at Adam Mesh Trading Group, also speaks. (Source: Bloomberg) April 9 (Bloomberg) -- Stanley Crouch, chief investment officer of Aegis Capital Corp., talks about the outlook for the equity market and investment strategy. Crouch, speaking with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack," also discusses JPMorgan Chase Co. trader Bruno Iksil's bets in credit derivatives. (Source: Bloomberg) April 9 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Alix Steel report on today’s ten most important stocks including Rosetta Stone, Apple and JPMorgan Chase. (Source: Bloomberg) April 9 (Bloomberg) -- Mark Zandi, chief economist at Moody's Analytics Inc., talks about the outlook for the U.S. labor market and economy. He speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg) April 9 (Bloomberg) -- Jeremy Friesen, a commodity strategist at Societe Generale SA in Hong Kong, talks about oil prices and demand. He also discusses gold, copper, and agricultural commodities. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg) April 9 (Bloomberg) -- Kit Juckes, head of foreign-exchange research at Societe Generale SA, says the March employment report is a reminder that the U.S. economy is growing, but "much more slowly than people have been used to over the past decade." Juckes talks with Bloomberg's Ken Prewitt on Bloomberg Radio's "Bloomberg - The First Word." (Source: Bloomberg)

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Companies Mentioned

  • AA
    (Alcoa Inc)
    • $16.59 USD
    • 0.11
    • 0.66%
  • AOL
    (AOL Inc)
    • $43.3 USD
    • 0.09
    • 0.21%
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