U.S. stocks retreated on Friday, with the S&P 500 index falling a second straight weekly drop, after a strong monthly jobs report fueled expectations for an interest rate hike by the Federal Reserve this year.
U.S. nonfarm payrolls rose 295,000 last month, topping estimates for a gain of 240,000, after a downwardly revised 239,000 increase in January. The unemployment rate fell to 5.5 percent from 5.7 percent in January.
"The economy added jobs, but wages have risen by only 2 percent, barely above inflation," Rob Williams, deputy editor of NewsmaxFinance, said on "The Steve Malzberg Show" on Newsmax.TV. "With today's weakness in stocks, we may see a March low next week before rising into options expiration the following week."
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"There's speculation we're going to see an increase in rates earlier than anticipated," Jim Herrick, director of equity trading at R.W. Baird in Milwaukee, adding that selling had accelerated for technical reasons.
The Dow Jones industrial average was down 279 points, or 1.5 percent, to 17,857, the S&P 500 lost 30 points, or 1.4 percent, to 2,071 and the Nasdaq Composite was off 56 points, or 1.1 percent, to 4,927.
In a shakeup of the Dow Jones industrial average, Apple Inc., the largest U.S. company by market value, will join the index this month, replacing AT&T Inc. Apple rose 0.2 percent to $126.60 after reaching as high as $129.37, while AT&T fell 1.5 percent to $33.48.
"This brings the Dow into reality and the twenty-first century," said Richard Sichel, chief investment officer AT Philadelphia Trust Co in Philadelphia. "It will make the Dow a more interesting index to watch, but also more volatile since it is replacing a nice, steady old name with an interesting and exciting tech and retail company."
The S&P utilities sector was the worst performer on Friday with a 3.1 percent decline as investors fled the high-yielding stocks as they appeared less attractive than government bonds with the prospect of an interest rate hike.
All of 31 U.S. banks scrutinized passed a test of how they would do in another possible economic crisis, the Fed said on Thursday, but those with large trading books came out weak because of new elements in the check-up. Bank of America shares rose 1.4 percent to $16.22.
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