Stocks fall on mixed jobs report, debt worries
A battered stock market recovered from a sharp drop in late trading Friday but still posted its fourth straight weekly drop.
The Dow Jones industrials, down nearly 170 points in afternoon trading, clawed their way back to finish with a gain of 10. But more stocks fell than rose on the New York Stock Exchange as investors contended with another series of troubling signals about the global economy.
Investors are concerned that European governments will have trouble getting their massive deficits under control. The Labor Department, meanwhile, offered only scant hope of improvement in the jobs market in its closely watched monthly report.
“Clearly we’ve entered the worry, fear camp,” said Rob Lutts, president and chief investment office at Cabot Money Management. “It’s a very fragile investor psychology today. It doesn’t take much … to send them running for the hills.”
The market pulled off its lows in the last hour of trading as the dollar came of its highs. A rising dollar hurts commodity prices, which become more expensive for foreign buyers when the dollar climbs.
The Federal Reserve also said during afternoon trading that consumers borrowed less for an 11th straight month in December but that total borrowing fell far less than expected. The drop of $1.8 billion was less than the decline of $9 billion analysts had expected. That fueled hopes that consumer spending will increase.
But for the second straight day, other economic news was unsettling. On Thursday, the Dow fell 268 on growing worries about the global economy.
The U.S. unemployment rate unexpectedly fell in January to 9.7 percent from 10 percent, the government reported, even though analysts expected an uptick. At the same time, however, employers cut 20,000 jobs, more than the 5,000 economists expected, according to Thomson Reuters. The two numbers are calculated from different surveys.
Timothy Speiss, head of Eisner LLP’s Personal Wealth Advisors group, said the improving unemployment rate was a good sign, but investors are well aware that the problems in the economy that have stocks falling in recent weeks are still there.
“There will be excitement, relief about the number,” Speiss said. “But we need to keep going.”
The jobs report came as more troubling news emerged in Europe that Portugal and other weak economies were falling behind in their efforts to control their deficits.
Portugal’s opposition parties defeated a government austerity plan Friday and passed their own bill allowing the country’s autonomous regions to rack up even more debt. That raised new questions about European countries’ ability to control their swollen budget deficits, which are undermining faith in the region’s euro currency. Greece and Spain are also grappling with massive budget deficits.
The worries about Europe are another bullet point for investors who for weeks have been concerned about China’s efforts to keep growth in check as well as plans in Washington to place more restrictions on big banks.
According to preliminary calculations, the Dow rose 10.05, or 0.1 percent, to 10,012.23.
The broader Standard & Poor’s 500 index rose 3.08, or 0.3 percent, to 1,066.19, while the Nasdaq composite index rose 15.69, or 0.7 percent, to 2,141.12.
About three stocks fell for every two that rose on the NYSE, where volume came to 1.6 billion shares.