Market Wrap: Stocks Decline on Fears of Rising Interest Rates

Financial Markets Wall Street
Richard Drew/AP
By Sinead Carew

NEW YORK -- U.S. stocks closed lower Friday and the S&P 500 (^GSPC) declined for a second straight week after a strong monthly jobs report as investors bet that the Federal Reserve could raise interest rates sooner than previously expected.

Some of the worst-hit stocks were utilities and real estate investment trusts as they are high-yielding investments, which would look less attractive after a rate hike. The S&P and the Dow (^DJI), which accelerated their declines as the day wore on, were under additional pressure because they had hit records earlier in the week after a strong February.

U.S. nonfarm payrolls rose 295,000 last month, topping estimates for a gain of 240,000, after a downwardly revised 239,000 increase in January. The unemployment rate fell to 5.5 percent from 5.7 percent in January. The strong report, seen as a gauge for the timing of the Fed's first rate hike in years, may put pressure on the Fed to move soon, said Randy Frederick, managing director of trading and derivatives for Charles Schwab (SCHW) in Austin, Texas. "You have to think that report makes the likelihood of a June rate increase somewhat higher," said Frederick.

AT&T Out of the Dow, Apple In

The S&P extended its losses as the session wore on having found little support after it fell below its two-week intraday low, according to Frank Cappelleri, technical market analyst at Instinet in New York.

The Dow Jones industrial average fell 278.94 points, or 1.54 percent, to 17,856.78, the S&P 500 lost 29.78 points, or 1.42 percent, to 2,071.26 and the Nasdaq composite dropped 55.44 points, or 1.11 percent, to 4,927.37.

For the week, the S&P 500 fell 1.6 percent while the Dow slid 1.5 percent and the Nasdaq dropped 0.7 percent. The S&P and the Dow both ended the day more than 2 percent lower than their March 2 records. The S&P saw its biggest percentage decline since early January on Friday.

In a shakeup of the Dow Jones industrial average, Apple (AAPL), the largest U.S. company by market value, will join the index this month, replacing AT&T (T). Apple shares rose 0.15 percent at $126.60 after rising as high as $129.37 while AT&T fell 1.5 percent to $33.48. "If anything, what that should do is cause the Dow to be more volatile," said Schwab's Frederick, because the Dow is a price-weighted index and Apple has a higher share price than AT&T.

The utilities sector was the worst performing S&P 500 sector with a 3.1 percent decline and the Dow Jones Equity Reit Index finished off 3.2 percent. About 7.2 billion shares changed hands on U.S. exchanges, compared with the 6.4 billion average for the last five sessions, according to data from BATS Global Markets.

Declining issues outnumbered advancing ones on the NYSE by 2,683 to 438, for a 6.13-to-1 ratio on the downside; on the Nasdaq, 1,926 issues fell and 840 advanced for a 2.29-to-1 ratio favoring decliners. The benchmark S&P 500 index posted 13 new 52-week highs and four new lows; the Nasdaq composite (^IXIC) recorded 67 new highs and 47 new lows.

What to watch Monday:
  • Urban Outfitters (URBN) and United Natural Foods (UNFI) are due to release quarterly financial results after U.S. markets close.
8 PHOTOS
The 6 Best Things to Buy in March
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Market Wrap: Stocks Decline on Fears of Rising Interest Rates
The travel industry sees a decline in travel throughout late winter, including March. That's often because people don't have a reason, or the time, to get away. If you can, though, take advantage of the low prices, which are found across the board. Cash in those airline miles, pick up that new luggage you've been meaning to buy and plan for a weekend getaway that'll give you some reprieve from the humdrum of your current life. Prices are lower on car rentals, airfare, lodging, travel essentials and more.
Now that the lovey-doviest day of the year has passed -- and there's no major jewelry-buying holiday in sight until Mother's Day -- retailers are eager to move their bling. Keep an eye out for in-store and online specials at your favorite retailers during all of March and even into April. Also, don't be afraid to put your haggling hat on and negotiate lower prices, even if there isn't a sale going on. Because of the pressure to sell during this slow time, you'll have an easier time negotiating with desperate sales reps.
March is National Reading Month, so expect an uptick in sales and specials throughout the month as retailers celebrate. Also be sure to shop clearance sections at your local bookstore and cash in on those coupons and online discount codes. For even cheaper books, try try thrift stores and websites such as Half.com.
There's a noticeable shift in scents at the change of every season. For example, winter calls for richer, heavier personal fragrances, and candles and other home fragrances are typically very wintry (cranberries, birch trees, etc.) during the cold months. Perfumers and home fragrance retailers are putting out new scents right now, which means last season's goods are hitting the clearance bin. Stock up for now and later.
As we get closer to warmer weather, people pull up their sleeves and prepare for spring cleaning and organizing. So this is the time for new products (even if it's just a slight change in formulation or scent),and introductory rates to get you to try them. Keep your eyes peeled and your home fresh.
March is also National Frozen Food Month, so expect coupons and specials from frozen-food firms. To keep track of specials and to find coupons, follow these companies on social media, get e-mail blasts from them and pick up your Sunday paper. Score better deals when you stack a manufacturer coupon with a store coupon or special.
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