Job News Takes Toll on Stocks
Stocks slumped and bond yields plunged Friday after a report showing modest U.S. job growth and a guarded revenue outlook from technology bellwether Intel disappointed investors.
The tech-laden Nasdaq composite index slid 1.6% -- taking a far steeper hit than the main blue-chip barometers -- as investors shied away from riskier, highflying stocks.
Yields on Treasury bonds -- which move opposite to the bonds’ prices -- had their steepest drop since September, and the dollar hit a new low versus the euro as traders reacted to the day’s tepid economic news.
“The economy is doing better, but a lot of so-called experts have been predicting really dramatic improvement,” said Don Hodges, manager of the Hodges Fund in Dallas. “The jobs report wasn’t that bad, but those guys on CNBC in the morning looked like they had just come back from a funeral.”
On Wall Street, the Dow Jones industrial average backed away from its most recent assault on the 10,000 level, slipping 68.14 points, or 0.7%, to 9,862.68, as 27 of the 30 Dow stocks declined.
The Standard & Poor’s 500 index lost 8.22 points, or 0.8%, to 1,061.50, and Nasdaq skidded 30.98 points to 1,937.82.
Losers beat winners by 3 to 2 on the New York Stock Exchange and by 2 to 1 on Nasdaq. Volume was moderate, curtailed by an East Coast snowstorm.
After reaching their loftiest levels in 18 months or more, the three major indexes finished the week mixed: The Dow gained 0.8% over the last five sessions and the S&P; 500 rose 0.3%, but the Nasdaq dropped 1.1%.
Late Thursday, chip giant Intel said it expected sales of $8.5 billion to $8.7 billion this quarter, near the top of the range it had projected. However, some analysts had been hoping the company would boost its forecast. Intel, which also said it would take a charge because of weakness in its wireless division, fell $1.44 on Friday to $32.10.
Friday morning, the Labor Department said employers added a net 57,000 jobs in November.
The tally marked the fourth straight month of payroll gains but fell well shy of economists’ forecasts and represented a decline from October’s climb.
Some saw Friday’s market action as a sign that investors were becoming more cautious, moving away from the high-flying stocks -- particularly those of smaller companies -- that have paced the market this year.
“Any whiff of bad news spurs profit taking,” said Dick Green, president of the financial Web site Briefing.com in Chicago.
Investors have gotten leery of steep valuations, Green said, citing Web auctioneer EBay, which is up 65% year to date but has stalled in recent months.
“We’re seeing a shift toward the stocks that have not had a very big percentage move, but they have good defensive characteristics in case the market fizzles next year,” Hodges said.
In the Treasury market, the yield on the two-year T-note sank to 1.87% from 2.04% on Friday. The yield on the 10-year note fell to 4.23% from 4.37%.
The latest economic data bolstered the belief that the Federal Reserve was unlikely to raise interest rates to stave off inflation, or even signal the need to do so, at Tuesday’s meeting.
“The bond market is assuming, and rightly so, that the Fed is not going to take action next week,” Green said.
In other highlights:
* Intel dragged the SOX index of chip stocks to a 3.2% loss. Xilinx fell $2.09 to $35.53 and Altera dropped $1.17 to $23.43.
* Software maker Adobe Systems slid $2.75 to $38.90 on an analyst downgrade from U.S. Bancorp Piper Jaffray.
* Oil service stocks bucked the down trend. Halliburton gained 85 cents to $24.40 and Schlumberger rose $1.07 to $49.24.
* Machinery maker Caterpillar, upgraded by Smith Barney, rose $1.56 to $76.50.
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Market Roundup, C4-5
