Economic Haziness Weighs on Stocks
Uncertain investors pushed stocks lower Friday as the latest report on U.S. employment trends failed to answer lingering questions about the economy and interest rates.
The dollar rose against the euro and posted its second-largest weekly gain after Treasury Secretary John Snow said the Bush administration wanted to “sustain the strength” of the currency. The euro fell to $1.305, down from $1.317 on Thursday and $1.364 at its peak on Dec.30.
Treasury bond yields held steady as the latest Labor Department job-creation report was seen as sufficiently strong to allow Federal Reserve officials to keep raising interest rates at a measured pace. The yield on the benchmark 10-year T-note was unchanged at 4.27%, though up from 4.22% a week ago.
The government said 157,000 jobs were created in December -- fewer than the 175,000 expected, but still a decent showing, analysts said.
But with wages growing slowly, according to the Labor Department, and a wave of fourth-quarter earnings reports due next week, investors remained skittish about placing large bets.
The Dow Jones industrial average eased 18.92 points, or 0.2%, to 10,603.96 after trading in positive territory for much of the day.
Broader indexes also saw modest losses. The Standard & Poor’s 500 index was down 1.70 points, or 0.1%, at 1,186.19, and the Nasdaq composite lost 1.39 points, or 0.1%, to 2,088.61.
Falling shares outnumbered winners by about 8 to 5 on the New York Stock Exchange.
Smaller stocks, which had led the market higher last year, are leading it lower this year. The Russell 2,000 index fell 1.1% on Friday and 5.9% for the week.
The first week of 2005 was a difficult one for Wall Street as the major indexes fell four out of the five sessions. Profit taking from the strong rally in November and December, combined with fresh fears about inflation and higher interest rates, stole momentum from market bulls.
For the week, the Dow lost 1.7%, the S&P; fell 2.1% and Nasdaq tumbled 4%.
The week’s downward trend doesn’t bode well for those who believe that the market’s direction for the year can be divined by the performance during the year’s first five days. Although the “January indicator” usually is accurate for a positive week -- the market has risen for the year 29 out of 34 years when the first week of trading was positive -- a down week has equated to a down year only 10 of 20 years.
In other market highlights:
* Shares of El Segundo-based Unocal rose for a second session on reports that a Chinese oil company might make a takeover bid. Unocal added $1.32 to $45.46, giving the company a market value of almost $12 billion.
* Luxury retailer Tiffany climbed $1.20 to $31.50 after reporting a 12% rise in holiday sales. Luxury retailers stood out in an otherwise lackluster season for retailers.
* Video store chain Hollywood Entertainment, which has become a takeover target, slipped 7 cents to $13.05 after saying it had been notified by Nasdaq that its shares might be delisted Wednesday because the company didn’t hold an annual meeting last year.
* TiVo, a maker of digital video recorders that pause and replay live television, fell 84 cents to $4.96 after DirecTV Group said it would offer a similar product. DirecTV, based in El Segundo, is controlled by News Corp.
