U.S. stocks declined Friday after government data showed the economy created just 38,000 jobs last month, the weakest level of hiring in six years.Â Â The weak jobs report is likely to prompt the Federal Reserve to delay rate increases this month, according to analysts.
The S&P 500 index retreated from its 7-month high, notched on Wednesday. The index was down 16 points, or 0.8% at 2,089 and on track to finish the week lower. Financial stocks fell sharply with the exchange-traded Financial Select Sector ETF (XLF) slumping 1.6%. Lower rates can impede banks' ability to generate profits.Â Â Consumer discretionary stocks were also sharply lower, with the sector trading down 1.8%.
Meanwhile, U.S. Treasurys, which are also sensitive to shifts in rate-hike expectations, saw their prices soar, pushing yields sharply lower as doubts about the vigor of the economy and a possible delay in rate hikes sparked buying appetite for the safety of government bonds. The benchmark 10-year Treasury yield fell 8 basis points to 1.70%.
"This jobs report is truly disappointing even after accounting for Verizon strikes. It gives a lot of ammunition for the Fed to wait longer before raising rate and certainly puts in doubt a rate hike in June," said Quincy Krosby, market strategist at Prudential Financial.Â Â "So far, the market is taking the bad news as bad news. More importantly we will see if Janet Yellen sees it as bad news," Krosby said.
Federal Reserve Chair Janet Yellen is scheduled to give a speech to the World Affairs Council of Philadelphia on Monday.Â Â Kristina Hooper, U.S. investment strategist for Allianz Global Investors, said she would write off a June rate hike completely just yet.Â Â "Odds of a June rate hike diminished but the Fed might still do something less conventional, like a smaller, 12.5 basis point increase," she said.