U.S. stocks end lower after lackluster jobs gains
SAN FRANCISCO (MarketWatch) -- U.S. stocks closed lower Friday, with the Dow industrials and S&P 500 suffering losses for the week after a report on the U.S. labor market showed tepid, below-forecast growth in payrolls last month.
The markets were, "for the most part, prepared for the poor [jobs] number," said Robert Barone, a portfolio manager and partner at Universal Value Advisors in Reno, Nev.
And while there was a reaction to the downside, by the end of the day, the markets were only off by about 1%, he said. "Some volatility -- yes. Major damage -- no."
The Dow Jones Industrial Average (DJIA) fell 124.20 points, or 1%, to close at 12,772.47, tallying a 0.8% loss for the week.
The S&P 500 Index (SPX) fell 12.90 points, or 0.9%, to 1,354.68, ending 0.6% lower for the week.
The two benchmark indexes have now posted declines for two out of the last three weeks.
The Nasdaq Composite Index (COMP) lost 38.79 points, or 1.3%, to 2,937.33. It climbed 0.1% on the week to score its fifth-straight weekly gain.
"Markets have a lot to digest here," said Michael Gayed, chief investment strategist at Pension Partners LLC. "We got stimulus from [the Bank of England, People's Bank of China and European Central Bank] this week, which risk assets would normally see as bullish, but that near-term optimism is being countered by a reminder of the weak jobs market."
The Labor Department reported the U.S. economy created 80,000 jobs in June, less than the 100,000 expected in a MarketWatch survey of economists. Hiring slowed sharply in the second quarter, with job growth averaging 75,000 a month versus 226,000 in the first quarter. Read more on jobs growth.
"Buying stocks and hiring people are both things you do when you want to take risks," according to Jerry Webman, chief economist at OppenheimerFunds.
Right now, there's enough uncertainty to keep "investors and employers from wanting to take additional risk," he said. "That's reflected both in the employment numbers and in what stocks are doing."
Friday's selloff was broad. On the Dow, only five of 30 components -- including
All 10 S&P 500 component sectors finished lower, with nearly half down more than 1%, led by a 1.8% drop in technology. Read more on technology stocks.
On the Nasdaq,
For every stock advancing, more than two declined on the New York Stock Exchange, where about 596 million shares traded. Composite volume topped 2.7 billion, or less than three-quarters of the last month's average.
QE3 prospects
Despite recently downbeat economic data, Gayed said he doesn't believe that expectations for a third round of quantitative easing by the Federal Reserve are rising, "given that bond yields are already at historic lows." Read more reactions to the jobs data.
But Michael Yoshikami, chief executive of Destination Wealth Management in Walnut Creek, Calif., said that "without a clear shock-and-awe strategy from the Fed, markets are concerned that inaction will lead to a more severe slowdown."
So although "the current reaction to the jobs numbers suggest worry over the future of the economy, the Fed can (and in our view) will take action very soon," he added. "This, coupled with the coordinated action this week from international monetary agencies, will provide enough economic lubrication to get the global economy moving again."
For now, commodities were broadly lower, with gold futures (GCQ2) closing at $1,578.90 an ounce, down $30.50 for the session, and crude (CLQ2) ending below $85 a barrel in reaction to the U.S. jobs data. Read more on gold.
In currencies, the U.S. dollar traded at a two-year high versus the euro, with the euro (EURUSD) buying $1.2278, its lowest since the middle of 2010. The dollar index (DXY) , tracking the greenback against a basket of global currencies, was up at 83.235 from 82.826 late Thursday. Read more on currencies.
In fixed income, yields on 10-year Treasury notes (10_YEAR) fell 5 basis points to 1.55%. Bond prices move inversely to their yields. Read more on the action in U.S. bonds.
Looking ahead, "major market movers next week will be Spain and Italy yields, and a watchful eye for any contagion from the Finland attitude about living without euro," said Richard Hastings, a macro strategist at Global Hunter Securities, who also noted that it'll also be a big week for Chinese economic data.
"The underlying market theme remains dominated by sovereign debt-induced deflation and huge global demand for dollars and Treasurys," he commented. "Nothing right now is more powerful."
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