Treasuries sank, sending the 10-year yield to the highest since August 2011, while the dollar rallied and gold tumbled as faster-than-forecast jobs growth fueled bets the Federal Reserve will begin to reduce its bond buying. U.S. stocks erased early gains to trade little changed.
The rate on the 10-year U.S. note climbed 18 basis points to 2.68 percent as of 10:21 a.m. in New York and the Dollar Index, which tracks the currency against six major peers, rose 1.4 percent to 84.41. Gold declined 2.9 percent to $1,213.95 an ounce. The Standard Poor’s 500 Index rose less than 0.1 percent after climbing as much as 0.7 percent. Trading volumes for stocks in the U.S. benchmark index were 25 percent below the 30-day average at this time of day. The Stoxx Europe 600 Index lost 1.2 percent.
U.S. employers added 195,000 workers last month, almost the same as in May, while the jobless rate held at 7.6 percent, according to data from the Labor Department. European Central Bank President Mario Draghi pledged Thursday to keep interest rates at a record low for an “extended period.” The statement contrasts with that of the Fed, which fueled last month’s global stock and bond rout by signaling debt purchases could be scaled back this year.
Today’s jobs report “should be continued bad news for the bond market,” David Kelly, the chief global strategist at JPMorgan Funds in New York, said by telephone. His firm oversees about $400 billion in mutual funds. “You have an economy that is clearly improving, it’s improving steadily. This economy is a tortoise not a hare. It is moving forward, but the bond market is still priced like it is moving backward. Ultimately, this is not bad news for the stock market.”Oil stays at 14-month high
The price of oil is higher Friday after a positive report on U.S. hiring and amid ongoing concerns that the crisis in Egypt might affect Mideast supplies.
In morning trading, benchmark crude for August delivery was up 37 cents to $101.61 on the New York Mercantile Exchange. On Wednesday, oil closed above at $101.24, the highest level since May 3, 2012. U.S. markets were closed Thursday for Independence Day.
Following the ouster of Egyptian president Mohammed Morsi, his supporters began a series of protests and attacks Friday. The military opened fire as hundreds of protesters marched on a headquarters of the Republican Guard
Egypt is not an oil-producer but its control of the Suez Canal, one of the world’s busiest shipping lanes, gives it a crucial role in maintaining global energy supplies.
For now, supplies are moving freely through the canal.
In the U.S., employers added a robust 195,000 jobs in June and many more in April and May than previously thought. The job growth suggests a stronger economy and makes it more likely the Federal Reserve will slow its bond purchases before year’s end.
Those bond purchases have supported the economy by helping keep long-term interest rates low. That in turn has given a boost to investments such as stocks and oil.Galaxy S4 disappoints
Samsung Electronics, the world’s biggest smartphone maker, posted second-quarter earnings that missed analyst estimates as sales of its flagship Galaxy S4 handset fell short of analyst expectations.
Operating profit rose to about 9.5 trillion won ($8.3 billion) in the three months ended June from 6.5 trillion won a year earlier, Suwon, South Korea-based Samsung said in preliminary earnings released Friday. That compares with the 10 trillion-won average of 34 analyst estimates compiled by Bloomberg.
The S4 was released in April with a bigger screen and motion-detecting software to help Samsung reclaim the top spot in the U.S. market from Apple Inc.’s iPhone and boost growth at its biggest source of earnings. The stock slumped 13 percent last month as at least 15 analysts cut earnings estimates amid concern the high-end smartphone market is nearing saturation.
“It sharply missed the market expectation, and that worries me,” said Byun Han Joon, a Seoul-based analyst at KB Investment Securities Co. “The market was initially concerned about the third- and fourth-quarter results, but today’s news raises questions if the earnings are already in bad shape.”
Byun said smartphone shipments for the quarter totaled 74 million, or 2 million less than he expected.
Sales were about 57 trillion won in the June quarter, compared with 47.6 trillion won a year earlier, the company said Friday. That compares with the 58.6 trillion-won average of 38 estimates.
Shares of Samsung, which accounts for 19 percent of the benchmark Kospi index, fell as much as 3.2 percent before trading 2.9 percent lower at 1,279,000 won as of 11:21 a.m. in Seoul. The stock has dropped 16 percent this year, compared with a 7.8 percent decline in the Kospi.Mealworms allergy risk
Eating mealworms, insect larvae seen as an alternative to beef and pork, may pose a risk to people allergic to shellfish or dust mites, Dutch researchers said.
Laboratory tests found a possible link, Geert Houben, food-safety business line manager at TNO, said Friday. TNO conducted a study with the University Medical Centre Utrecht. The organizations will now serve the larvae to people to test for allergic reactions in a separate follow-up study carried out with the national food-safety authority, Houben said.
Insects are nutritious and convert feed more efficiently than cows or pigs while producing fewer greenhouse gases, according to the United Nations’ Food Agriculture Organization, which promotes their use as food. Mealworms are a “serious candidate” to replace poultry, beef and pork, according to Delft, Netherlands-based TNO.
“There’s more and more international activity in the quest for alternative protein sources,” Houben said. “We’re cheering on this search for alternatives, but you do have to keep an eye out for possible risks.”
The Star’s news services