Stocks Fall Despite Stronger Than Expected Jobs Growth

Friday, November 2nd 2007, 8:29 am
By: News On 6

NEW YORK (AP) _ Wall Street waffled Friday after a surprisingly strong October jobs report failed to alleviate escalating worries about the beleaguered financial sector.

The Labor Department said employers added 166,000 jobs to their payrolls in October, the most since May. The figure was nearly double what economists had expected, according to a Thomson/IFR survey. The unemployment rate held steady at 4.7 %, in line with September and analysts' consensus forecast.

But Wall Street was clearly still shaky after Thursday's plunge, which took the Dow Jones industrials down more than 360 points. The market has been mercurial lately, with economic data coming in mixed and the possibility of interest rate cuts ending, and Friday's trading saw the major indexes alternating between gains and losses.

The biggest losers in the stock market Friday, as they have been in the past few months, were financial institutions _ including Merrill Lynch & Co., Washington Mutual Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. Multiple analysts have issued research notes in recent days expressing concern about banks' and brokerages' exposure to the tight credit markets and the likelihood of subprime mortgage problems spilling into other types of consumer debt.

It's likely that as strong as the jobs number was, investors will need to see more evidence of a stronger economy and more stability in the credit markets before they can make any major commitments to stocks.

The Dow fell 41.95, or 0.31 %, to 13,525.92 in mid-morning trading, partly reflecting the pullback in financial stocks.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 5.43, or 0.36 %, to 1,503.01, while the Nasdaq composite index rose 2.53, or 0.09 %, to 2,797.36.

Bond prices rose. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.30 % from 4.35 % late Thursday.

This week has brought a jumble of contradictory economic news.

The market on Thursday was unnerved by news that consumers cut back their spending in September and that the manufacturing sector expanded in October at the slowest pace since March. But earlier in the week, an initial estimate of third-quarter economic growth came in stronger than economists had expected, at 3.9 %.

Oil prices rebounded on the New York Mercantile Exchange, after dropping sharply Thursday. Prices have been exceptionally volatile in recent days as the market treads through record territory. A barrel of oil rose 79 cents to $94.28.

The dollar traded mixed against other major currencies.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 415.2 million shares.

The Russell 2000 index, which tracks the performance of small-company stocks, fell 0.50, or 0.06 %, to 794.68.

European stock markets followed Wall Street lower. Britain's FTSE 100 fell 0.59 %, Germany's DAX index shed 0.47 %, and France's CAC-40 declined 0.58 %.

Asian markets tumbled in the wake of Wall Street's losses on Thursday. Japan's Nikkei stock average fell 2.09 %, while Hong Kong's Hang Seng index fell 3.25 %.