Wall St drops after robust USA jobs report, weak earnings

Wall St drops after robust USA jobs report, weak earnings

Wall St drops after robust USA jobs report, weak earnings

Based on the relationship between federal funds futures and the 5-year TIPS yield, an additional half-percentage point of Fed tightening should raise the TIPS yield by about 30 basis points (or 3/10 of a percentage point).

Equity markets are torn between buoyant economic growth and double-digit company earnings, and the possibility that United States and euro zone central banks will tighten policy faster than expected, which is pushing up bond yields.

The Toronto Stock Exchange's S&P/TSX Composite Index ended down 90.75 points, or 0.57 per cent, at 15,860.92, its lowest close since October 25.

Volume on USA exchanges was 7.80 billion shares, above the 7.23 billion average for the full session over the last 20 trading days.

Equity traders around the world have been firing on all cylinders in recent months, sending markets to record or multi-year highs, on confidence in the global economy, healthy earnings and optimism over Donald Trump's tax cuts.

U.S. Treasury yields continued to climb after economic indicators seemed to confirm the Fed's inflation views.

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"At now high valuations for developed market equities, investors should tread cautiously in what remains a top-of-cycle environment, even if rising bond yields are more likely a headwind than a precursor to a crisis", said Alastair George, chief strategist at Edison Investment Research.

The Dow Jones Industrial Average .DJI rose 37.32 points, or 0.14 percent, to 26,186.71, the S&P 500 .SPX lost 1.83 points, or 0.06 percent, to 2,821.98 and the Nasdaq Composite .IXIC dropped 25.62 points, or 0.35 percent, to 7,385.86.

Earlier in Germany, the benchmark 10-year bund hit two-year highs as yields firmed across the euro zone due to signs of inflation.

The stock helped the consumer discretionary index rise 0.72 percent, the only gainer among the 11 major sectors.

Other notable stock movers included eBay, up 13.8 per cent after its earnings report, and its announcement that it would move away from PayPal as its main payments partner.

Apple shares initially struggled for direction before falling 1.4 percent as investors gave more credence to the company's muted forecast than strong iPhone prices and cash plans.

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Shares of oil majors Exxon and Chevron were down 4.1 percent and 1.9 percent, respectively, after they both posted lower-than-expected quarterly profits.

Analysts see fourth-quarter S&P 500 earnings growth of 14.9 percent, up from 12 percent expected on January 1. Doll said his target for fair value on the S&P 500 is 2,800 for year end. So far, of 227 companies that have reported, 79.7 per cent have come in above Street estimates.

Amazon.com was up over 2 per cent in after hours trading after results.

But Shanghai closed up 0.4 per cent, Sydney rose 0.5 per cent and Wellington gained 0.4 per cent. Manila, Bangkok and Jakarta were also higher.

Declining issues outnumbered advancers on the NYSE by 2,404 to 298.

The S&P 500 index showed 12 new 52-week highs and 16 new lows, while the Nasdaq recorded 20 new highs and 32 new lows.

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Volume on USA exchanges was 7.80 billion shares, above the 7.23 billion average for the full session over the last 20 trading days.

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