U.S. stocks fall, dollar and Treasury yields rise

By Sinead Carew

NEW YORK (Reuters) - U.S. stocks fell in choppy Wall Street trading on Thursday, a day ahead of a key U.S. jobs report, while the dollar pared gains after U.S. economic data and Treasury yields rose.

The United States last week had its biggest rise in jobless claims in eight months, while third-quarter productivity gained after a drop in self-employment caused overall hours worked to fall for the first time in six years, restraining costs.

A day after Federal Reserve Chair Janet Yellen referred to December as a "live possibility" for a rate hike, investors were waiting for Friday's key U.S. monthly nonfarm payrolls report to gauge if the data is strong enough to prompt a liftoff.

 

"There's a lot of people that doubt the market and they're still skittish and don't believe the rally or think they ought to be in bonds," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, Texas. But he added, "I don't see interest rates going up dramatically even though the Fed keeps saying they're going to raise."

At 2:54 p.m. EST (1954 GMT) the Dow Jones industrial average <.DJI> fell 23.05 points, or 0.13 percent, to 17,844.53; the Standard & Poor's 500 <.SPX> index lost 4.56 points, or 0.22 percent, to 2,097.75; and the Nasdaq Composite <.IXIC> dropped 23.44 points, or 0.46 percent, to 5,119.04.

Weak commodity prices weighed on energy while Celgene dragged on the healthcare sector after its revenue missed estimates. Energy shares <.SPNY> led the S&P decline with 1.2 percent drop. Interest-rate sensitive sector utilities <.SPLRCU> were the next weakest sector, followed by healthcare stocks <.SPXHC>.

U.S. two-year Treasury yields hit their highest levels in 4-1/2 years on expectations for a December rate hike, while long-dated yields also rose on fresh corporate supply.

"Investors have adjusted their probabilities, adjusted their risk, adjusted their positions; now they're going to see what happens tomorrow," said John Briggs, Americas head of strategy at RBS in Stamford, Connecticut, referring to Friday's jobs report. [L1N13021H]

The dollar <.DXY> was up 0.1 percent against a basket of major currencies in late afternoon trading after hitting its highest level since early August earlier in the session. The euro was up slightly against the dollar at over $1.08 >.

Gold > and Copper were both weighed down by the prospect of a December rate hike. Gold fell for the seventh straight session, to as low as $1,104.3 an ounce, its weakest since Oct. 2.

The Philadelphia SE Gold/Silver index <.XAU> was down 4.9 percent and copper fell 2.5 percent, also hitting its lowest level since Oct. 2.

Oil futures were down on oversupply concerns and weak gasoline prices. U.S. crude futures settled down 2.4 percent at $45.20 a barrel, and Brent crude settled down 1.2 percent at $47.98. [O/R]

In Europe the FTSEurofirst 300 index <.FTEU3> of major companies closed down 0.4 percent.

(Additional reporting by Sam Forgione and Barani Krishnan in New York, Clara Denina in London and Abhiram Nandakumar in Bengaluru; Editing by Andrew Roche, Meredith Mazzilli and Richard Chang)