A woman walks through the 2014 Spring National Job Fair and Training Expo in Toronto on April 3, 2014.Aaron Harris/Reuters
North American stock markets were lower Friday morning as traders weighed stronger than expected U.S. job creation data and how it would affect when the U.S. Federal Reserve might decide to start raising interest rates.
The S&P/TSX composite index edged up backed off 2.87 points to 15,100.24 as the U.S. Labor Department announced that the economy created 295,000 jobs in February, much higher than the approximately 245,000 that economists expected. Canadian employment data for February will be released March 13.
The Canadian dollar declined 0.63 of a U.S. cent to 79.45 cents as the greenback appreciated following the release of the jobs data.
New York indexes were lower as the Dow Jones industrials declined 84.9 points to 18,050.82, the Nasdaq fell 8.52 points to 4,974.29 and the S&P 500 index was down 2.87 points at 2,093.41.
Other data showed that wage growth in February was up just 0.1 per cent.
The rising American currency also pressured commodity prices and oil in New York was 83 cents lower at US$49.93 a barrel.
However, Apple Inc. rose 1.5 per cent as the company will be added to the Dow Jones industrial average, replacing AT&T Inc., which slumped 1.1 per cent.
"Investors are looking and focusing entirely on what the Federal Reserve will do in the coming months," Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $170-billion, said by telephone. "Effectively good news in this data point supports the notion that they will raise rates in the not-too-distant future. That scotches the speculative fervor within the equity market."
Employers added more jobs than forecast in February and the unemployment rate dropped to 5.5 per cent, the lowest in almost seven years, showing America's labour market is sustaining progress after the best annual performance in 15 years.
The 295,000 advance in payrolls last month followed a 239,000 January increase that was smaller than previously reported, figures from the Labor Department showed Friday in Washington. The median forecast in a Bloomberg survey of economists called for a 235,000 increase. The unemployment rate fell from 5.7 per cent while hourly earnings rose less than forecast.
The Fed has pledged patience on increasing borrowing costs, even as the economy improves. Fed Bank of San Francisco President John Williams, who votes on policy this year, said late Thursday that mid-year may be time for a "serious discussion" about raising interest rates as the labor market nears full employment and inflation rebounds. The central bank next meets on March 17-18.
"Everybody was waiting to see this number the Fed has been really clear saying everything is data dependent and this is one of the large data segments they've been looking at," George Rusnak, co-head of global fixed income at Wells Fargo Private Bank in Princeton, New Jersey, said by phone.
The S&P 500 rose to fresh records four times in February, its best month since October 2011, even as Citigroup Inc.'s economic surprise index showed data have been missing projections by the most since July 2012. Valuations are at five– year highs, and the equity benchmark is trailing all but two of the 24 developed-market indexes this year.
Apple will be added to the Dow in the first reshuffling of the index since September 2013.
The changes will push the number of technology-related companies in the 30-member gauge to six and boost their influence even more as the world's largest company by market capitalization joins Microsoft Corp., Intel Corp., International Business Machines Corp., Cisco Systems Inc. and Visa Inc. AT&T is being kicked out after falling 4.5 per cent in 2014. The changes will take effect with the start of trading on March 19.
With files from Bloomberg News