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US stocks fade, Treasury yields rise following jobs report

NEW YORK (AP) — U.S. stocks faded from their record highs on Friday, and the Standard & Poor's 500 index was on track to fall for the first time in nearly two weeks. Energy stocks were particularly weak following another drop in the price of oil.

Treasury yields climbed after a report showed that wages across the country rose more than expected last month, though the gains diminished later in the day. The government's jobs report, often the most anticipated economic data of each month, was unusually difficult to parse after damage from recent hurricanes dragged down employment from Texas to Florida. But economists said it should keep the Federal Reserve on pace to continue raising interest rates.

KEEPING SCORE: The Standard & Poor's 500 index fell 5 points, or 0.2 percent, to 2,547, as of 2:45 p.m. Eastern time. If it stays there, it would be the first loss for the index in nine days and snap its longest winning streak in four years.

The Dow Jones industrial average lost 14, or 0.1 percent, to 22,761, and the Nasdaq composite was close to flat at 6,585. All three indexes closed at records on Thursday.

WASHOUT JOBS REPORT: Employers cut more jobs last month than they added, the first time that's happened in seven years. It's a sharp turnaround from earlier this year, when the strengthening job market was encouraging investors to push stocks higher and higher.

Economists had been warning of a particularly weak figure and cautioned not to take too much away from the report. Hurricanes Harvey and Irma meant the closure of thousands of businesses, and drops in employment at restaurants and bars were a big driver of last month's decline.

Other economic data have been more encouraging, including particularly strong reports on the nation's manufacturing and services sectors earlier this week.

Friday's jobs report contained some encouraging signs. Average hourly wages jumped 2.9 percent in September from a year earlier, more than economists expected. Some of that may be due to how many lower-wage jobs were lost following the hurricanes, but the government also revised up its figure for wage growth in August.

"The previous month's revision, that probably has the most information" of all the data points in the government's jobs report, said Jon Adams, senior investment strategist at BMO Global Asset Management. "From the Fed's perspective, this doesn't change anything in terms of overall policy, but it makes them a little more worried about inflation."

If rising wage growth feeds into higher prices across the economy, it makes the Fed that much more likely to keep raising rates from their record lows. Investors made moves Friday in anticipation of a rate increase in December as a result.

YIELDS RISE: The yield on the 10-year Treasury jumped as high as 2.39 percent shortly after the release of the jobs report, up from 2.35 percent late Thursday. But the gains faded later in the day, which traders said may have been due to worries about tensions with North Korea. A Russian lawmaker said that North Korea is preparing to test-fire a long-range missile soon.

After its midday fade, the 10-year yield sat at 2.37 percent.

The two-year Treasury yield, which is more affected by moves in Fed policy, climbed to 1.52 percent from 1.49 percent. The 30-year yield rose to 2.90 percent from 2.89 percent.

DIVIDENDS DOWN: Higher interest rates make bonds more attractive to investors looking for income, and that undercuts demand for stocks that pay relatively big dividends.

Telecom stocks in the S&P 500 fell 2.1 percent, the largest drop among the 11 sectors that make up the index.

LOW ENERGY: Energy stocks were also among the market's weakest after the price of benchmark U.S. crude sank $1.50, or 3 percent, to settle at $49.29 per barrel. It's the fourth drop for oil in the last five days. Brent crude, the international standard, lost $1.38, or 2.4 percent, to $55.62 per barrel.

WAREHOUSE WEAKNESS: Costco Wholesale fell the most in the S&P 500 despite reporting stronger earnings for the latest quarter than expected. Analysts pointed to a slight drop in its membership renewal rates, among other factors.

Costco lost $9.48, or 5.7 percent, to $157.59.

MARKETS OVERSEAS: The FTSE 100 in London rose 0.2 percent, France's CAC 40 fell 0.4 percent and Germany's DAX dipped 0.1 percent.

Japan's Nikkei 225 rose 0.3 percent, and the Hang Seng in Hong Kong added 0.3 percent.

CURRENCIES: The dollar slipped to 112.72 Japanese yen from 112.85 yen late Thursday. The euro rose to $1.1731 from $1.1708, and the British pound fell to $1.3063 from $1.3116.

COMMODITIES: Natural gas fell 6 cents to settle at $2.86 per 1,000 cubic feet, wholesale gasoline lost 5 cents to $1.56 per gallon and heating oil fell 4 cents to $1.74.

Gold rose $1.70 to settle at $1,274.90 per ounce, silver gained 15 cents to $16.79 per ounce and copper fell 2 cents to $3.03 per pound.