Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Jobless Rate Drops, but So Do Stocks despite Good News from Unemployment Report, Investors Wary of Looming Hike in Interest Rates

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Jobless Rate Drops, but So Do Stocks despite Good News from Unemployment Report, Investors Wary of Looming Hike in Interest Rates

Article excerpt

Every month, shortly after the U.S. Bureau of Labor Statistics releases its Employment Situation Summary, the commentary starts to flow. Economists, advocacy groups and unions chime in on the meaning of the numbers, which have a high rate of volatility from month to month.

In Friday's report from the bureau, the headline news was all good: Seasonally adjusted unemployment fell from 5.7 percent in January to 5.5 percent in February as employers added 295,000 jobs. Employers have added an average of 288,000 jobs a month for the last three months.

The strong numbers knocked down the price of stocks, with the major indices losing more than 1 percent of their value as investors feared the news would lead the Federal Reserve to raise interest rates.

The Dow Jones industrial average fell 278.94 points to close at 17,856.78, a loss of 1.54 percent. The Standard & Poor's 500 Index fell 29.78 points to close at 2,071.26, down by 1.42 percent. The Nasdaq composite closed at 4,927.37, down 55.44 points or 1.11 percent.

Doug Handler, chief U.S. economist at IHS Global Insights in Lexington, Mass., said the good news masked disappointing labor force numbers. The labor force, which is a measure of the number of people who are working or looking for work, fell in February by 178,000.

Mr. Handler said while the numbers don't show a trend yet, the size of the labor force will be "the first place I look after the headline numbers next month."

Wages were fairly flat in February, with just a 2 percent increase year over year, about the same as it has been since 2009, Mr. Handler said.

Gus Faucher, chief economist for Pittsburgh-based PNC Financial Services Group, said the unemployment report supports the bank's forecast that the Fed will raise interest rates in the fall.

At the Economic Policy Institute, a think tank in Washington, D. …

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