published Apr 1st 2016, 12:29 pm, by Stephen Kirkland and Jeremy Herron

(Bloomberg) —
U.S. stocks rose, reversing earlier losses, while Treasuries retreated as signs of life in the manufacturing sector and a strong jobs report bolstered confidence in the world’s largest economy. Crude erased gains for the year.

The Standard & Poor’s 500 Index rebounded from a 0.7 percent slide amid the first expansion in U.S manufacturing in seven months. The Bloomberg Dollar Spot Index wiped out gains, while Treasuries fell as hiring data added to speculation the economy can withstand tighter monetary policy. Crude dropped as Saudi Arabia’s deputy crown prince said the kingdom will only freeze production if Iran and others follow suit. Global equities started the second quarter with the steepest loss in about a week.

“We now have a super dovish Fed in our corner and jobs data in line with the trend,” Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York, said by phone. “The market initially sold off on the conflict of a dovish message and then beats on every single line of the data but now people are realizing you have a combination of better economic data and a Fed that’s being very gentle with the market.”

While signs are mounting that the U.S. economy continues to expand, futures traders don’t give more than a 50 percent chance for the Fed’s next rate increase until November as slowing growth overseas remains in focus for central-bank policy makers. Friday’s jobs report showed employment climbed and wages picked up in March, while a surge in orders last month signaled American factories are emerging from their worst slump since the last recession.

Stocks

The S&P 500 rose 0.3 percent, as gains by health-care and financial companies offset declines in energy shares. U.S. equities ended the first quarter near where they began following a whipsaw ride that saw them rally from the worst-ever start to a year. The gauge rose 0.8 percent in the past three months, marking the first time since 1933 it finished a quarter with a gain after falling at least 10 percent.

The MSCI All-Country World Index dropped 0.6 percent at 1:26 p.m. in New York. The Stoxx Europe 600 Index retreated 1.3 percent after wrapping up its third quarterly decline in four on Thursday.

“The weaker international markets had us down before the jobs report, and that will be just as much of a driver of market sentiment today,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “Since it’s the start of the quarter, it’s not surprising to see a little bit of a pause.”

Trading has been light amid a three-week stretch that’s seen the S&P 500 go its longest without a daily move of 1 percent in more than a year. The Chicago Board Options Exchange Volatility Index, the measure of market turbulence known as the VIX, fell 32 percent in March, snapping its longest streak of monthly increases in four years.

Emerging Markets

The MSCI Emerging Markets Index dropped 1.1 percent, after climbing 13 percent in March, the best monthly gain in almost seven years. When the equity gauge last increased more than 13 percent in May 2009, it declined the following month before resuming a rally in July.

Brazil’s Ibovespa advanced, while benchmark gauges in Russia, Poland, South Africa, South Korea and Taiwan fell. The Hang Seng China Enterprises Index of mainland companies trading in Hong Kong slid 1.8 percent after rising on Thursday to the highest level since early January.

The Shanghai Composite Index added 0.2 percent on Friday, following the biggest monthly advance in almost a year, as traders weighed gains in manufacturing and a cut in the nation’s credit-rating outlook by S&P.

Commodities

Oil headed for the first weekly decline since February. With producers scheduled to meet in Doha this month to complete an accord on capping output, Saudi Arabia’s Mohammed bin Salman signaled in an interview with Bloomberg that if any country raises output, the kingdom will also boost sales. While Iran will attend the talks, it has ruled out limiting supply as it restores exports after sanctions were lifted in January.

Crude futures dropped 3.4 percent to $37.03 a barrel in New York on Friday.

“The Saudi comments about requiring all producers to take part in the freeze doom the Doha talks,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “The Doha process is falling apart before our eyes. The market has richly rewarded the rhetoric.”

Bonds

Treasuries fell, with shorter-maturity notes leading declines. Signs of labor-market strength may slow Treasuries’ momentum after the market’s strongest annual start since 2008.

The yield on the two-year note, which is sensitive to Fed policy expectations, rose four basis points, or 0.04 percentage point, to 0.76 percent. Benchmark 10-year note yields added one basis point to 1.78 percent.

The gap between two- and 30-year yields fell four basis points to 1.85 percentage points as the latest drop in oil prices helped underpin longer-dated bonds, which are more influenced by the outlook for inflation and economic growth.

“The curve is definitely flattening today and now starting to gain a little momentum,” said Brian Edmonds, the head of interest rates in New York with Cantor Fitzgerald Co., one of 22 primary dealers that trade with the Fed. “People are looking at the long end on a relative value basis globally, and the bonds are still relatively cheap against bunds and others.”

Currencies

The dollar fluctuated after the jobs report bolstered speculation that policy makers will proceed cautiously on plans to raise interest rates. The Bloomberg Dollar Spot Index was little changed after climbing as much as 0.6 percent.

A Bloomberg gauge tracking 20 developing-nation currencies fell 0.1 percent after surging more than 6 percent last month in a record gain.

Colombia’s peso and Peru’s new sol led declines on Friday, while Brazil’s real and South Africa’s rand strengthened at least 1 percent.