Friday, October 2, 2009

U. S. Stocks Fall On Disappointing Jobs Data

. Friday, October 2, 2009

By stockOzone team

Stocks were modestly lower Friday after a disappointing jobs report that further undermined hopes for a steady recovery in the U.S. economy.

The Labor Department's monthly employment report was the latest in a series of releases showing adverse moves in key indicators that had previously been improving. In the most dramatic example, a weak reading of U.S. manufacturing activity sparked a 203-point slide in the Dow Jones Industrial Average in Thursday's session.

Analysts said many investors unloaded shares following the disappointing data earlier in the week, leaving few sellers on the sidelines when the jobs report was released prior to Friday's opening bell. As the session has played out, the market has also drawn support from chart-based buying that kicked in after major indexes dropped below key levels.

The Dow, which was off almost 80 points at its low shortly after the opening bell and clawed back from the selloff to briefly turn positive in afternoon trading, fell 21 points, or 0.2%, to 9487.67. The blue-chip measure came into Friday's action down 1.6% for the week and closed out its second straight weekly loss.

Despite the market's recent struggles, many longtime investors remain confident that there is room for continued improvement in corporate profits and stock prices thanks in part to spending by the government and businesses to replace the traditional role of the U.S. consumer.

While market participants have winced at several of this week's big-picture reports, the data haven't yet sparked widespread talk of a so-called double-dip recession in which the U.S. would suffer a second downturn before it has fully recovered from the one that began in late 2007.

"It's kind of impressive how the market has held up today," said Uri Landesman, portfolio manager at ING Investment Management in New York. "I'm still feeling as if I can add a bit of risk here and hold some less-than-high-quality names. Yeah, I may have to take a little bit of pain in the short term, but I like the potential for upside looking further out."

The News Hub panel discusses whether Rio's winning bid for the 2016 Olympic Games will tarnish Obama and Chicago, and parses news of a new federal stimulus program. Other indexes ended lower after seesawing between gains and losses in recent action. The technology-focused Nasdaq Composite Index was off 0.5% at 2048. The small-stock Russell 2000 slipped 0.6%.

The S&P 500 was down off 0.5%, led by a 1.1% decline in its recovery-sensitive industrial sector. But other categories were little changed, with financials and consumer staples managing to post slight gains.

A technical move helped the broad index recover from its early decline to trade near break-even in the afternoon, as the index bounced off its 50-day moving average around 1021, a level traders highlighted as a point of support for the index. Industrials and consumer discretionary were the index's weakest sectors, down 1.1% each. But the financial and consumer staples sectors managed to eke out small gains.

On the economic front, the Labor Department said employers eliminated more jobs than expected last month as the unemployment rate climbed to 9.8%, another sign that a rapid recovery in the labor market is unlikely. Nonfarm payrolls declined by 263,000 in September, worse than the 175,000 decrease economists surveyed by Dow Jones Newswires survey had expected.

"We're seeing reminders here that recoveries are often choppy," said Don Rissmiller, chief economist at Strategas Research Partners in New York.

Referring to a term analysts use to describe a quick, sharp economic rebound, he added: "If we are having a V-shaped recovery, it's only in certain sectors, or it's happening abroad, not in the U.S."

However, some participants remain concerned that the market's 60% gain since March -- and its best quarterly performance since 1998 -- may have gotten ahead of the broader economy, which remains in recession.

In other economic news Friday, the Commerce Department said U.S. factory goods orders fell in August, brought down by a lower demand for airplanes. The decline snapped a string of increases in a sign manufacturing's recovery from recession will be fitful.

Treasurys prices rallied after the U.S. nonfarm payroll data, but later retreated. The euro rebounded versus the dollar and the dollar slipped against the yen.

CIT Group rose 10% after the troubled lender announced a fresh restructuring program.

First Solar rose 4.3% after Standard & Poor's said the Tempe, Ariz.-based maker of solar power modules will be added to the S&P 500, replacing Wyeth, which is being bought by Pfizer.

Crude-oil futures settled below $70 a barrel as participants took profits after Thursday's rally.

Disclosure: Author does not own any of the stocks discussed here.





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