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Stocks In The Red As Traders Digest Mixed Jobs Report - U.S. Commentary

wallstreet2 103112 10Jan14

After failing to sustain an initial upward move, stocks have moved to the downside over the course of the trading day on Friday. A negative reaction to the monthly jobs report is weighing on the markets, although selling pressure remains subdued.

The major averages have moved roughly sideways in recent trading, lingering in negative territory. The Dow is down 57.87 points or 0.4 percent at 16,386.89, the Nasdaq is down 8.48 points or 0.2 percent at 4,147.71 and the S&P 500 is down 4.57 points or 0.3 percent at 1,833.56.

The weakness on Wall Street comes following the release of a report from the Labor Department showing that U.S. employment rose by much less than expected in the month of December.

The report said non-farm payroll employment edged up by 74,000 jobs in December compared to economist estimates for an increase of about 200,000 jobs.

The job growth in December reflects a substantial slowdown from the upwardly revised increase of 241,000 jobs in November.

Bad weather during the month likely contributed to the weaker than expected job growth, as the Labor Department said 273,000 people were not able to work because of the weather, the most since 1977.

At the same time, the Labor Department said the U.S. unemployment rate dropped to 6.7 percent in December from 7.0 percent in November. The drop pulled the unemployment rate down to its lowest level since October of 2008.

While the drop in the unemployment rate came as a surprise to economists, the decline was largely due to a decrease in the size of the labor force as some unemployed people gave up looking for work.

The mixed data has generated some uncertainty about the outlook for the Federal Reserve's future monetary policy decisions.

The weaker than expected job growth has led to speculation that the Fed will hold off on its plan to continue scaling back its asset purchases, while the central bank has also indicated that it will consider raising interest rates when the unemployment rate drops below 6.5 percent.

Sector News

Despite the pullback by the broader markets, significant strength is visible among gold stocks. The NYSE Arca Gold Bugs Index has surged up by 2.6 percent after trending lower over the past few sessions.

The strength among gold stocks comes amid an increase by the price of the precious metal, with gold for February delivery climbing $14.60 to $1,244 an ounce.

Housing, airline, and utilities stocks are also seeing some strength on the day, helping to limit the downside for the markets.

Meanwhile, networking, banking, and brokerage stocks have come under pressure, with the NYSE Arca Networking Index pulling back further off Wednesday's two-year closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.2 percent, while China's Shanghai Composite Index dropped by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.7 percent, the German DAX Index and the French CAC 40 Index both ended the day up by 0.6 percent.

In the bond market, treasuries have moved sharply higher on the heels of the monthly jobs report. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has tumbled by 8.3 basis points to 2.88 percent.

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