US stocks fall as jobs report lifts talk of rate hike

NEW YORK (AFP) - Wall Street stocks dropped Friday after a solid US July jobs report lifted expectations the Federal Reserve will soon raise interest rates.

The Dow Jones Industrial Average lost 46.37 points (0.27 per cent) at 17,373.38.

The broad-based S&P 500 shed 5.99 (0.29 per cent) at 2,077.57, while the tech-rich Nasdaq Composite Index fell 12.90 to (0.26 per cent) to 5,043.54.

The Labour Department said the US economy added 215,000 jobs last month and that unemployment held steady at a seven-year low rate of 5.3 per cent.

The report brought the average monthly jobs gains to 235,000 over the past three months, heightening expectations that the Fed could raise its near-zero federal funds rate as early as next month.

"The report is actually positive," said Jack Ablin, chief investment officer at BMO Private Bank. "Perhaps it's strong enough to elicit a Fed reaction with a rate hike, but it's not so strong as to excite economists."

Technology companies with larger declines included Amazon (-1.3 per cent), Netflix (-2.3 per cent) and Priceline (-2.6 per cent).

Oil-linked stocks fell as crude prices dropped. Dow members Chevron and ExxonMobil lost 1.7 per cent and 1.6 per cent, respectively, while oil-services company Weatherford International fell 5.8 per cent and EOG Resources declined 5.1 per cent.

Dow member American Express jumped 6.3 per cent following a Bloomberg News report that activist fund ValueAct Capital Management had amassed about a US$1 billion (S$1.4 billion) stake in the credit-card giant.

Cablevision Systems fell 2.7 per cent on doubts about the cable business as it reported second-quarter net income of 27 cents per share, two cents better than analyst expectations.

Other media and cable companies, including Disney (+0.7 per cent), 21st Century Fox (+2.8 per cent) and Viacom (+2.6 per cent), rallied following deep losses in Thursday's session.

Online coupon company Groupon lost 5.3 per cent on earnings that translated into two cents per share, a penny shy of analyst expectations on sales that came in about US$2 million below the analyst estimate of US$740.25 million.

Nvidia, which specialises in graphics and visual computing, jumped 12.4 per cent as it reported second-quarter sales grew 4.3 per cent. Deutsche Bank said gaming revenues were better than expected.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.17 per cent from 2.22 per cent Thursday, while the 30-year dipped to 2.83 per cent from 2.89 per cent. Bond prices and yields move inversely.