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Jobs Data, Fiscal Cliff Lead To Mixed Close On Wall Street - U.S. Commentary


With traders digesting relatively upbeat employment data while also expressing continued concerns about the looming fiscal cliff, stocks turned in a mixed performance on Friday. A notable loss by Apple (AAPL) weighed on the tech-heavy Nasdaq once again.

The major averages finished the session on opposite sides of the unchanged line, with the Nasdaq in the red. While the Nasdaq fell 11.23 points or 0.4 percent to 2,978.04, the Dow climbed 81.09 points or 0.6 percent to 13,155.13 and the S&P 500 rose 4.13 points or 0.3 percent to 1,418.07.

For the week, the major averages also turned in a mixed performance. The Nasdaq fell by 1.1 percent, while the Dow advanced by 1 percent and the S&P 500 inched up by 0.1 percent.

The mixed performance on Wall Street came despite the release of a report from the Labor Department showing that the U.S. economy added far more jobs than anticipated in the month of November.

The Labor Department said non-farm payroll employment increased by 146,000 jobs in November compared to economist estimates for an increase of about 85,000 jobs.

However, the report also showed a notable downward revision to the pace of job growth in the two previous months.

While the Labor Department also said the unemployment rate fell to a nearly four-year low of 7.7 percent, the drop reflected a decrease in the size of the labor force as some unemployed people gave up looking for work.

Sal Guatieri, Senior Economist at BMO Capital Markets, said, "The better-than-expected report doesn't alter the view that the economy is grinding out just moderate job gains, as businesses continue to worry about the uncertain outlook for fiscal policy."

Worries about the fiscal cliff offset some of the positive sentiment generated by the jobs report, with lawmakers continuing to struggle to reach an agreement to avoid the $600 billion in automatic tax increases and spending cuts currently due to go into effect at the end of the year.

Leaders of both parties continue to accuse those on the other side of the aisle of failing to offer a serious plan, with House Speaker John Boehner, R-Ohio, calling the Democrats' plan "a joke" in a statement released earlier in the day.

As mentioned above, a notable drop by shares of Apple contributed to the loss posted by the Nasdaq, with the iPad and iPhone maker falling by 2.6 percent on the day. Apple tumbled 8.9 percent for the week.

Sector News

Many of the major sectors ended the day showing only modest moves, contributing to the lackluster performance shown by the broader markets.

Health insurance stocks saw considerable strength, however, driving the Morgan Stanley Healthcare Payor Index up by 1.6 percent. With the gain, the index ended the session at its best closing level in over seven months.

WellCare (WCG) and Molina Healthcare (MOH) turned in two of the health insurance sector's best performances, advancing by 3.5 percent and 3.4 percent, respectively.

Significant strength was also visible among banking stocks, as reflected by the 1.1 percent gain posted by the KBW Bank Index. Chemical, gold, and oil stocks also saw some strength on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Friday. While Australia's All Ordinaries Index advanced by 0.9 percent, Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index edged down by 0.2 percent and 0.3 percent, respectively.

The major European markets also ended the day mixed. The German DAX Index dipped 0.2 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index inched up by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries came under pressure on the day on the heels of the upbeat jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.6 basis points to 1.627 percent.

Looking Ahead

The Federal Reserve's monetary policy meeting is likely to attract some attention next week, although traders are also likely to keep a close eye on developments in Washington.

Trading could also be impacted by the release of reports on the U.S. trade deficit, retail sales, industrial production and producer and consumer price inflation.

by RTTNews Staff Writer

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