After Record Week, Dow Slips on Paltry Job Gains
Wall Street ended a record-breaking week quietly Friday, edging lower after the Labor Department said employers added far fewer jobs than expected last month.
The 51,000 jobs nonfarm payrolls picked up in September was well off the 120,000 that Wall Street expected. The Dow fell 16.48 points, or 0.14%, to 11,850.21, slightly below the record close of 11,866.69 set the day before.
Broader stock indicators also declined. The Standard & Poor’s 500 index was down 3.64 points, or 0.27%, at 1,349.58, and the Nasdaq composite index fell 6.35 points, or 0.28%, to 2,299.99.
Although Wall Street fretted over the paltry expansion in employment, bond traders focused on upward revisions to July and August job numbers and a drop in the unemployment rate to 4.6% in September from 4.7% in August.
Those numbers suggest that the economy is running near full employment, which could dash hopes that the Federal Reserve would soon begin cutting its benchmark interest rate, said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.
The yield on the benchmark 10-year Treasury note shot up to 4.70% from 4.61% on Thursday. Bond yields rise as their prices fall.
“Some investors are concerned that the Fed will hold rates at a high level and not ease [if] the labor market looks tight,” Thayer said.
Overall, however, the week was a memorable one for stock investors, with the Dow index finally coming all the way back from the dot-com meltdown early in the decade, recession and then the Sept. 11 , 2001, terrorist attacks. Corporate malfeasance made household names of Enron and other companies and further undermined investor confidence before more than four years of solid corporate profit growth helped rebuild the Dow 30. Most recently, the Fed’s decision to stand pat on interest rates bolstered investor enthusiasm.
The Dow rose 1.47% for the week, while the S&P; gained 1.03% and the Nasdaq rose 1.84%. Despite the overall gains in the market, the S&P; stands about 12% below its record closing high of 1,527.46 and the Nasdaq is much further off, about 54% below its March 2000 high of 5,048.62.
The market’s rise has had a big assist from falling crude oil prices, which have dropped sharply from their 2006 trading high of $78.40 a barrel in July. On Friday, crude oil futures slipped 27 cents to $59.76 a barrel in New York trading.
Falling oil prices make it less likely that companies will have to raise their prices and put more money in consumers’ pockets for other purchases.
In other market highlights:
* General Motors sank $2.08 to $31.05 as Jerome York resigned from the automaker’s board after the company’s failure to form an alliance with Japan’s Nissan Motor and France’s Renault. York was an emissary of dissident shareholder Kirk Kerkorian, who owns 9.9% of GM through his investment company. Kerkorian has been agitating for change at GM.
* Guitar Center of Westlake Village dropped $3.13 to $42.50 in the wake of a warning that its third-quarter sales wouldn’t meet forecasts because of flat guitar sales and poor results from its catalog business.
* Google shot up $8.69 to $420.50 on reports that the Internet search company was in talks to acquire YouTube Inc., which runs a video-sharing website.
* Crown Castle International, which builds signal towers for mobile phones, declined $1.65 to $33.10 after agreeing to acquire rival Global Signal for $4 billion in cash and stock. Including debt, the deal is valued at $5.8 billion. Global Signal jumped $3.84 to $53.94.
* Chattem rose $9.77 to $44.20 after it agreed to buy five over-the-counter products, including mouthwash and a sleep aid, from Johnson & Johnson and Pfizer.
* Micron Technology fell $2.40 to $15.14 after issuing a profit report that disappointed investors. Lackluster sales of flash memory chips raised questions about the company’s efforts to diversify its products.
* Business software maker WebMethods lost 81 cents to end at $6.67 after revealing that it wouldn’t meet its second-quarter sales forecasts.
