US stocks traded lower on Friday as the latest nonfarm payroll report supported the Federal Reserve’s data-dependent position on raising interest rates. The report indicated that the US labor market was steadily recovering with 215,000 jobs added during the month of July. The report also revealed that while wages and participation trends remained relatively weak, hiring was up and unemployment was down. Rising interest rates have a tendency to weaken shares as a higher exchange rate in currency leads to a decline in exporting profit for many traded companies.
The release of the nonfarm payrolls as well as low oil prices caused the Dow Jones to extend its losses to form its longest losing streak in the last four years. The index fell 46.37 points, or 0.3%, to trade at 17373.38 on Friday and lost a total of 316.48 points, or 1.8%, over the entire week. The Standard and Poor’s 500 index fell 5.99 points, or 0.3%, to trade at 2077.57 on Friday and lost 26.27 points, or 1.3% over the week. The Nasdaq Composite fell 12.9 points, or 0.3%, to trade at 5043.54 on Friday while its losses for the entire week stood at 84.74 points, or 1.7%. Looking at the entire year so far, the Dow is down 2.5% while the S&P and Nasdaq are up 0.9% and 6.5%, respectively.
The support for raising interest rates also lifted the dollar. The prospect of higher borrowing costs made the US dollar more attractive to traders, as seen in the dollar index. The index, comparing a number of currencies against the dollar, has risen to 98.334 at its peak and has since retreated to 97.62. The euro remained steady at $1.0967 while the yen traded at 124.37 against the US dollar.
Commodities remained soft as well as demand outlook remained gloomy and the increase in the dollar’s value weighed down the market. Oil prices continued to slide amid a U.S. gasoline glut and an increase in the number of active oil rigs. Crude oil fell to a new multi-month low and is currently trading at $44.14 after declining 0.5% in early Monday trading. Brent oil neared a six-year low and is currently trading at $48.35. The CRB Index, covering 19 commodities, has fallen to lows not seen since 2003 as it declines 14% yearly.
This week’s economic calendar kicks off with comments from Federal Reserve’s Vice Chair Stanley Fischer later today. More US employment data will be released tomorrow with the nonfarm productivity and unit labor costs reports. Closely tied to commodities, Chinese industrial production data will be released on Wednesday. On Thursday, the European Central Bank will publish the accounts of its monetary policy meetings, followed by US retail sales. On Friday, Germany will release its GDP data followed by Eurozone inflation data with the consumer price index.