Stocks Fall as Jobs News Points Up Weak Economy
The December jobs decline of 524,000 didn’t meet the market’s worst fears, but it was quiescent pretty severe. Next week brings facts on inflation and manufacturing
U.S. stocks finished broadly appear gloomy Friday on light trading volume following a report December nonfarm payrolls fell 524,000 after plunging a revised 584,000 in October, and the unemployment rate jumped to 7.2% from 6.8%.
The December payrolls number, though modestly above official consensus forecasts, was not as sorry as the 600,000 “speak softly account” some market participants had feared. Average hourly earnings rose 0.3% after rising 0.4% the month before, and the average work week barbarous to a record low.
Traders also eyed a report that showed a 0.6% decline in U.S. wholesale inventories and a 7.2% slump in wholesale sales in November.
Recent data pomp the U.S. economy continuing to slide into the worst recessions in decades, according to S&P MarketScope. The weak December job figures were giving investors little reason to support the market ahead of the weekend, adds S&P.
Bonds rose as investors sought the safety of government debt jointly the weakness in equities. The dollar index was solidly higher in a rebound. Gold futures finished stronger. Crude oil futures were lower as the weak household data raised the prospect of softening demand concerning oil and gas.
On Friday, the 30-stock Dow Jones pertaining medium finished lower by 143.28 points, or 1.64%, at 8,599.18. The broader S&P 500 hand shed 19.38 points, or 2.13%, to 890.35. The tech-heavy Nasdaq compounded index fell 45.42 points, or 2.81%, to 1,571.59.
On the New York Stock Exchange, 22 stocks were lower in price with regard to every nine that gained. Nasdaq breadth was 20-7 negative. Trading was slow.
Energy issues were among the worst performers attached the weakness in crude oil futures.
Next week will obtain a fresh wave of fourth-quarter earnings releases, by means of Intel (INTC) and Alcoa (AA) among the worthy of note names unveiling results. Data will subsist weighty before this well by retail sales, the New York Empire State and Philadelphia Fed manufacturing indexes, pertaining production, trade, University of Michigan consumer saying, cosnumer price index, producer price index, and denote and export prices adhering the docket. The Beige Book for the month-end policy meeting bequeath also exist released.
No fewer than seven Fed officials will be oratory adhering a range of topics nearest week, including remarks by Chairman Ben Bernanke in London adhering Tuesday.
In relating to housekeeping news Friday, U.S. nonfarm payrolls dropped 524,000 in December after diving a revised 584,000 in November (from -533,000 previously). October’s 320,000 decline was revised to -423,000 for a gin -154,000 revision over the prior two months. Action Economics notes that some 2.6 million people lost their jobs in 2008.
The unemployment rate climbed to 7.2% from 6.8% (revised from 6.7%), the highest since January 1993. The average workweek fell to 33.3 hours from 33.5. Average hourly earnings were up 0.3% from 0.4% in November. Total private payrolls fell 531,000, with a 251,000 decline in the goods producing sector, a 101,000 drop in construction, and a 149,000 pine in manufacturing. The service sector lost 273,000 jobs. Government added 7,000 workers.
“Though the headline figure undershot the -600,000 whispering, the data are worse than expected given the back revisions, the drop in the workweek, and the unemployment rate, and should remain supportive for Treasury gains and weigh a bit on stocks and the dollar when all is said and done,” says Action Economics.
U.S. wholesale inventories lay low 0.6% in November after a revised 1.2% slide in October (from -1.1%). Sales plunged by a record 7.1% following a 4.5% drop in October (revised from -4.1%). Auto sales fell a whopping 10.6% and are down 24.2% year-over-year. Petroleum sales were down 25.1% and are down 24.0% from a year ago. Much of the weakness in the data was price induced given the collapse in oil prices, notes Action Economics. Excluding oil, sales were down 4.2% and inventories fell 0.4%. The inventory-sales ratio surged to 1.25 from 1.16. The inventory-sales ratio excluding petroleum rose to 1.36 from 1.31.
“These data are original, mete continue to reflect the sharp deterioration in the economy and the subsequent dive in oil prices,” says Action Economics.
Original text: http://www.businessweek.com/investor/content/jan2009/pi2009019_226323.htm?campaign_id=rss_null
