US Stocks Slip After Smaller-Than-Expected Jobs Increase
By Donna Kardos
NEW YORK (MarketWatch) — U.S. stocks fell Friday as the market was disappointed by a smaller-than-expected increase in January nonfarm payrolls, although the unemployment rate fell to its lowest level since April 2009.
The Dow Jones Industrial Average was down 16 points, or 0.1%, to 12047, in recent trading. The measure’s financial components weighed, with Bank of America down 1.8% while J.P. Morgan Chase dropped 1.8%. Helping limit the decline, Boeing rose 0.5% and Merck advanced 0.5%.
The Nasdaq Composite fell less than a point at 2754. The Standard & Poor’s 500 index declined 0.2% to 1305.
The declines followed government data showing nonfarm payrolls rose by a net 36,000 last month as private-sector employers added 50,000 jobs.
While the data were likely affected by bad weather in January, when storms forced people to stay home, it was still a disappointment given that economists had expected an increase of 136,000 in the nonfarm payrolls.
The unemployment rate, which is obtained from a separate household survey, fell to 9% last month, better than the 9.5% rate that had been expected. However, the drop was driven in part by a 504,000 drop in the number of people in the civilian labor force.
“From my standpoint, there’s just a lot of people that have given up, and it isn’t necessarily indicative of our true unemployment,” said Stephen Leuer, floor trader at X-FA Trading.
Taken together, the reports left investors with a still-murky picture of the employment environment in the U.S.
“You’ve seen a very muted reaction to this morning’s jobs numbers simply because it doesn’t give a clear explanation on what’s happening with the economy,” said Adam Sarhan, chief executive at Sarhan Capital. “You also have the ongoing unrest in Egypt and the Middle East as a dark cloud that’s hovering over the market, so investors are really hesitant going into the weekend to take really aggressive positions one way or the other.”
Overseas, tens of thousands of protesters filled central Cairo’s Tahrir Square, deepening the standoff with a regime that continues to reject demands that Egyptian President Hosni Mubarak step down. But despite its size, the demonstration remained peaceful, a sharp change in atmosphere from the middle of the week when pro-Mubarak protesters set at the crowd with sticks, rocks and Molotov cocktails, sparking brutal clashes.
The euro slipped to $1.3552, from $1.3635 late Thursday. European Union leaders were set to agree to ask the group of countries using the euro to come up with concrete proposals on how to strengthen the European Financial Stability Facility, and ask the group’s president to work out the details of a permanent bailout mechanism by March, according to draft conclusions from a meeting of EU heads of state and government.
The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, rose 0.6%. Treasurys were lower, lifting the yield on the 10-year note up to 3.65%. Crude-oil futures slipped while gold futures also declined.
Among stocks in focus, Aetna jumped 9.7%. Its fourth-quarter earnings rose 30%, topping analysts’ expectations, as the health insurer’s cost of medical claims compared with premiums improved. In addition, the company projected earnings for the year well above analysts’ mean estimate.
JDS Uniphase surged 22%. The company, which makes products for telecommunications companies, cable operators and network-equipment manufacturers, swung to a fiscal second-quarter profit on strength in its optical segment. The company forecast current-quarter revenue above analysts’ expectations.
Las Vegas Sands fell 6.1%. The gambling company stormed back to profit for the fourth quarter, fueled by robust growth in the Chinese gambling enclave of Macau as well as a new $5.5 billion casino in Singapore. However, revenue fell short of Wall Street’s estimate.
Tyson Foods climbed 6.2%. Its fiscal first-quarter earnings surged 86%, smashing analysts’ expectations, as the largest U.S. meat packer benefited from stronger prices, sales volume and margins across most of its businesses.