US stocks give up gains as dividend stocks sink

KDWN

NEW YORK (AP) Stocks slipped Friday despite a report that showed robust growth in U.S. jobs and wages last month. The market is still on pace for the best week in several months.

Prices of ultra-safe U.S. bonds fell, boosting their yields, as investors speculated that the blowout employment report increased the likelihood that the Federal Reserve would raise interest rates by midyear. Utility stocks sank as higher bond yields made dividend-rich stocks less attractive to investors seeking income.

KEEPING SCORE: The Dow Jones industrial average was down 87 points, or 0.5 percent, to 17,797 as of 3:02 p.m. Eastern time. The Standard & Poors 500 index fell seven points, or 0.4 percent, to 2,054. The Nasdaq composite lost 19 points, or 0.4 percent, to 4,745.

The Dow is up 4 percent this week, on track for its biggest weekly gain since 2011, while the S&P 500 is up 3.3 percent, which would be its best week since October.

JOBS, JOBS, JOBS: U.S. employers added 257,000 jobs in January and wages jumped by the most in six years, evidence that the job market is closer to full health. The gain was far better than the 230,000 jobs economists had expected.

Adding to the strong report were revisions that showed hiring was far stronger in November and December than previously estimated. Workers wages, which have been mostly stagnant since the recession, rose at the fastest pace since 2008.

The January employment report was strong across the board, said Michelle Girard, an economy at RBS Securities, in a note to clients. While benchmark and seasonal factor revisions affect many of the month-to-month changes, even looking through that noise, the data were clearly very healthy.

RETREATING FROM SAFETY: Investors pulled out of bonds and gold, traditional havens in times of uncertainty. As bond prices fell, the yield on the 10-year Treasury note jumped to 1.95 percent from 1.81 percent, a large move. Gold fell $28.10, or 2.2 percent to $1,234.60 an ounce.

When times are good, it makes little sense to be invested in safe assets because they tend to underperform the broader market. The Dow Jones utility index, a collection of power company stocks, slid nearly 3 percent.

Its much more difficult to justify these high prices for utility stocks with yields rising like this, said Russ Koesterich, global chief investment strategist at BlackRock.

GREECE MEETING: Greece remains a concern for investors as the new government there tries to forge a deal on the countrys debts with its partners in the 19-country eurozone.

The finance ministers of the eurozones member countries will hold a meeting next Wednesday to discuss Greeces debts. The Athens stock index fell 2 percent Friday as investors worried about the outcome of the talks.

TAKING FLIGHT: Twitter rose $6.96, or 17 percent, to $48.23 after the company reported revenue that beat analysts expectations.

PLAYING OFFENSE: Military contractor Harris rose $6.59, or 10 percent, to $76.08 after announcing it would buy competitor Exelis for $4.4 billion. Exelis jumped 36 percent to $24.14 a share, a sign that investors believe the move could spark a bidding war for the company.

COMMODITIES: Oil prices extended their gains Friday, as benchmark U.S. crude rose $1.21 a barrel, or 2.4 percent, to close at $51.69. Brent, the international standard, gained $1.23, or 2.2 percent, to end at $57.80 a barrel in London. Silver fell 50 cents, or 2.9 percent, to $16.69 an ounce and copper fell a penny to $2.59 a pound.