US Treasuries and Wall Street fell after a report showed American employers added more jobs than expected last month, fuelling a rethink of expectations for Federal Reserve interest rate increases this year.
An ADP Research Institute report showed that US employers added 214,000 jobs in February, surpassing expectations in separate surveys by Bloomberg and Reuters for 190,000 jobs.
Friday's Labor Department data are expected to show that US private payrolls grew by 185,000 jobs in February, up from 158,000 the month before, while total non-farm employment is expected to be 190,000, according to a Reuters survey. The unemployment rate is forecast to remain at 4.9 per cent.
Traders have raised the odds for rate increases this year, with a 40 percent probability for a June hike, up from about 26 per cent a week ago, according to Bloomberg.
Wall Street moved lower. In 12.56pm New York trading, the Dow Jones Industrial Average slipped 0.1 per cent, while the Nasdaq Composite Index fell 0.3 per cent. In 12.40pm trading, the Standard & Poor's 500 Index declined 0.1 per cent.
"We're seeing momentum slow," Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer's Investment Research, told Bloomberg. "We're starting to see people talk about an accelerated Fed rate hike schedule. Just a few weeks ago, most expectations were much further out. With data coming in much stronger than expected, and the positive reaction from the stock market, the Fed outlook has changed."
The Dow fell as declines in shares of DuPont and those of Nike, last down each 1.2 per cent, outweighed gains in shares of Procter & Gamble and those of Merck, last up 1.6 per cent and 0.9 per cent respectively.
US Treasuries also fell, pushing yields on the 10-year note three basis points higher to 1.85 per cent.
The greenback strengthened.
"The US dollar has been responding to the improving tone of US data, which has brought forward market expectations for the timing of the next Fed hike," Ian Gordon, a foreign-exchange strategist at Bank of America in New York, told Bloomberg. "The ADP report suggested the risks to Friday's nonfarm payrolls report are on the upside."
Shares of Monsanto sank, last down 7.3 per cent, after the world's largest seed producer downgraded its 2016 profit forecast.
In Europe, the Stoxx 600 Index ended the day with an increase of 0.7 per cent from the previous close. The UK's FTSE 100 Index slipped 0.1 per cent. France's CAC 40 Index rose 0.4 per cent, and Germany's DAX Index climbed 0.6 per cent.