Bond Yields Dropped After Investors Focused on Moderate Wage Gains In Employment Report

Barry Adams
10 Mar, 2023
New York City

After two hours of trading on Wall Street, stocks lacked direction following the mixed nonfarm payroll report for February. 

Employers expanded payrolls at a brisk pace and businesses in leisure and hospitality, education and healthcare led the gains. 

The latest employment report offered another signal to policymakers as consumers shift spending to services and experiences from goods, driving the demand in travel and hospitality segments.  

Service inflation, excluding the housing market, is still running ahead of the overall inflation by a wider margin, making it difficult for policymakers to decide the future rate path. 

Crude oil and natural gas prices turned lower in volatile trading and hovered near recent one-year lows. 

While stocks lacked direction, bond yields plunged after wage gains moderated, lifting hopes that the inflationary forces may be waning and providing one more reason for policymakers to stick to smaller interest rate hikes of 25 basis points. 

 

Strong Job Gains In February 

Total nonfarm payroll employment increased 311,000 in February following the downwardly revised 504,000 in January, the U.S. Bureau of Labor Statistics reported Friday.  

Both the unemployment rate, at 3.6%, and the number of unemployed persons, at 5.9 million, edged up in the month. 

February payroll gain took the six-month average to 343,000 with notable job gains occurring in leisure and hospitality, retail trade, government, and health care.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents, or 0.2%, to $33.09 and increased 4.6%.

 

Stock Indexes Trend Lower 

Banks were added to the list of declining sectors including home builders, technology and specialty retailers. 

A total of 31 stocks in the widely followed S&P 500 index traded at new 52-week lows.  

The S&P 500 index decreased 0.2% to 3,910.95 and the Nasdaq Composite index declined 0.4% to 11,295.66. 

 

Bond Yields Dropped After Wage Gains Moderated In February 

The yield on 2-year Treasury notes dropped 26 basis points to 4.64%, 10-year Treasury notes declined 24 basis points to 3.68% and 30-year Treasury bonds fell 18 basis points to 3.69%. 

Crude oil price increased 31 cents to $76.03 a barrel and natural gas price fell 5 cents to $2.48 a thermal unit. 

 

Stock Movers 

Banks drifted lower after Silicon Valley Bank's parent announced a plan to raise as much as $2 billion. 

Regional banks M&T Bank, Fifth & Third Bank, KeyCorp, Comercia and Signature Bank declined between 2% and 5%. 

Allbirds Inc plunged 44% to $1.34 after the company said quarterly sales declined for the first time in its history and also announced a restructuring plan including shakeup in executive ranks. 

Oracle Corporation declined 2.7% to $84.46 after the database company reported, slightly lower-than-expected, revenue of $12.4 billion in its latest quarter. 

Gap Inc declined 3.5% to $11.07 after the specialty apparel retailer reported a fall in quarterly revenue and larger loss.