(Updates prices throughout)
* U.S. payrolls 288,000 vs forecast 210,000
* U.S. unemployment 6.3 pct vs forecast 6.6 pct
* Short-dated Treasuries lose ground, long end favored
* New violence in Ukraine crisis keeps caution high
By David Gaffen
NEW YORK, May 2 Wall Street shares slipped and
investors retreated to long-dated government debt on Friday, as
enthusiasm over strong U.S. jobs growth was undercut by flat
wages and a decline in the number of people looking for work.
Traders also said that news on more violence in eastern
Ukraine sparked a shift into the bond market that pushed the
yield on the 30-year note to lows not seen since last June.
The U.S. economy added 288,000 jobs in April, more than
expected. Even so, the report raised some concerns as more than
800,000 people left the U.S. labor force and average hourly
wages were unchanged in April.
"The market perceives the unemployment numbers as good on
quantity but bad on quality," said Guy Lebas, chief fixed-income
strategist at Janney Montgomery Scott in Philadelphia.
Selling in U.S. Treasuries was modest in short- and
medium-dated notes as investors responded to an increased
likelihood of interest-rate hikes from the Federal Reserve.
Investors moved into longer-dated Treasuries, pushing down their
yields, on views that the economy is still not strong enough to
The three-year Treasury note was down 2/32 in price to yield
0.872 percent, while the 30-year bond, after an earlier selloff,
rose 1-6/32 in price, lowering its yield to 3.353 percent.
The jobs figures bumped up the odds of the Federal Reserve
raising rates sooner in 2015, with expectations for a rate
increase by June 2015 increasing to about 56 percent from 47
percent a day earlier.
U.S. stocks slipped after an early rally. The S&P 500 began
the day not far from its all-time closing high of 1,890.90 set
on April 2 but traded mostly flat on Friday after the labor
"On the face of it, these numbers are definitely good and a
confirmation that all the weather-related distortions are a
thing of the past," said Ian Gunner, portfolio manager at Altana
Hard Currency Fund. "But I would wait for another month of solid
job gains to see if this is really a one-off or a trend."
Pro-Russian rebels shot down two Ukrainian helicopters on
Friday, killing two crew members, while Moscow accused Kiev of
wrecking hopes of peace by launching a "criminal" assault to
retake the separatist-held town of Slaviansk.
The Dow Jones industrial average fell 56.6 points or
0.34 percent, to 16,502.27, the S&P 500 lost 3.71 points,
or 0.2 percent, to 1,879.97, and the Nasdaq Composite
dropped 4.737 points, or 0.11 percent, to 4,122.714.
In the currency market, the dollar edged lower against the
yen and was flat against the euro, giving up
Global markets were flat. The MSCI All-World Index
lost 0.01 percent while the FTSEurofirst 300
fell 0.3 percent.
Among commodities, oil remained top-heavy after Thursday's
slip following disappointing Chinese economic data and a survey
showing U.S. crude stocks rose last week to their highest level
since 1982. U.S. crude futures gained 43 cents to $99.85
a barrel while Brent crude rose 95 cents to $108.71.
Gold rose by $10.61 to $1,294.10, while copper,
whose industrial uses make it sensitive to growth
expectations, gained 1.2 percent.
(Additional reporting by Marc Jones in London; Editing by
Meredith Mazzilli and Leslie Adler)