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TheStreet Open House

Stocks Finish Mixed on Tech Pullback


NEW YORK ( TheStreet) -- The major U.S. stock averages finished mixed Friday as weakness in technology stocks negated much of the early euphoria about a surprise decline in the unemployment rate last month.

For the week though, Wall Street finished solidly in the green, getting October off to a strong start.

The Dow Jones Industrial Average closed up nearly 35 points, or 0.26%, at 13,610, pulling back after running as high as 13,662 earlier in the day. The blue-chip index, which finished the week up 1.3%, is now up 11.4% so far in 2012.

Breadth within the Dow was positive with gainers outpacing laggards, 20 to 10. The biggest percentage risers were Boeing ( BA), du Point ( DD), Home Depot ( HD), and Intel ( INTC).

The biggest Dow decliners were UnitedHealth ( UNH), Hewlett-Packard ( HPQ), and Bank of America (BAC).

HP shares drifted lower after the stock was cut to neutral from buy at Sterne Agee. The firm said the challenges the computer giant faces look to be both secular and structural in nature.

The S&P 500 dipped less than a point, or 0.03%, to settle at 1461, but closed the benchmark index was still 1.4% higher on the week. Year-to-date, it's up 16.2%.

The tech-heavy Nasdaq, though, took a sizable hit, falling more than 13 points, or 0.42%, to finish at 3136. It still gained 0.64% for the past five days and has jumped 20.4% in 2012.

The strongest sectors in the broad market were consumer non-cyclicals, transportation and conglomerates. Aside from technology, consumer cyclicals, energy and utilities were weak.

Apple ( AAPL) was a big headwind for the broad market as shares of the iPhone maker lost more than 2% to close at $652.59 on heavier than normal volume of more than 21.1 million. The stock has now seen a decline in seven of the past 10 sessions and is off 7.4% since hitting an all-time high of $705.07 on Sept. 21.

Breadth was mixed with gainers running slightly ahead of losers on the New York Stock Exchange but decliners outpacing advancers on the Nasdaq. Volume totaled 3.17 billion on the Big Board and 1.61 billion on the Nasdaq.

By far the biggest news of the day was the jobs data. The Bureau of Labor Statistics said nonfarm payrolls rose by 114,000 in September, just slightly ahead of the 113,000 consensus estimate, with the majority of the hiring coming in the health care and transportation and warehousing sectors.

The unemployment rate came in at a 44-month low of 7.8%, down from 8.1%, as the labor force participation rate edged up to 63.6% versus 63.5% previously; economists were predicting that the unemployment rate had risen to 8.2%.

Perhaps most encouraging though were healthy upward revisions to job creation in August and July to 142,000 and 181,000 respectively from the previous tallies of 96,000 and 141,000. The U-6 unemployment measure that includes individuals who have giving up looking for work was unchanged at 14.7%.

The data drew positive reviews from market strategists. Overall, "the employment report looks pretty darn good," said Dan Greenhaus, chief global strategist at BTIG, in a report.

"Treat this as a good number," echoed Eric Green, global head of research for rates and foreign exchange at TD Securities, in his note.

"Net revisions totaled 86k on the payroll survey. That is the good news. The bad news is that it was virtually all government workers," Green added. "That bucks a recent trend in which upward revisions were typically on the private side."

A breakdown of the report showed that private sector jobs grew by 104,000, which was better than downwardly-revised 97,000 in August, but below the 130,000 mark expected by economists.

The public sector added 10,000 jobs in September after upward revisions for the prior two months to jobs gained from jobs shed. Manufacturing employment edged down by 16,000 and on net has been unchanged since April.

Average hourly earnings rose by 0.3% last month versus an unchanged reading in August.

"The specifics of today's report aside, it cannot be overstated how important unemployment developments matter for the Federal Reserve ... Along with the difficulties the long term unemployed are having and lack of wage gains, the Fed remains in accommodative mode for the foreseeable future and today's report does not change that," said Greenhaus.

"Going forward though, the unemployment report takes on even more significance than it usually does and members of the FOMC have to look at today's report in a favorable light."

The FTSE 100 in London closed up 0.74% and the DAX in Germany rose 1.27% on Friday. The Nikkei Average in Japan closed up 0.44% and the Hang Seng in Hong Kong finished up 0.50%.

November crude oil futures settled down $1.83 at $89.88 a barrel. December gold futures fell $15.70 to close at $1,780.80 an ounce.

The benchmark 10-year Treasury plunged 20/32, bumping the yield to 1.748%. The greenback slipped 0.02%, according to the dollar index.

In corporate news, Sprint Nextel (S) is considering making a rival bid for MetroPCS Communications (PCS), which agreed on Wednesday to merge with T-Mobile USA, according to a report.

MetroPCS shares closed down 0.32%. Sprint shares rose 2.2%.

Arbor Realty Trust ( ABR ) shares tumbled 5.8% after the trust announced a public offering of 3.5 million shares of common stock.

Zynga (ZNGA), the social gaming company, forecast a loss for the third quarter and lowered its full-year outlook.

Shares plunged 11.9%.

Meanwhile, Facebook (FB) shares were down 4.7%, weighed down by Zynga, which contributed to 14% of the social networking giant's sales in the first half of 2012.

Toyota (TM) shares slipped than 1.6% after the Japanese automaker said its sales in China declined roughly 40% in September from the same time last year, in contrast to what many of its competitors are experiencing.

Constellation Brands (STZ), the N.Y.-based alcohol seller, posted fiscal second-quarter earnings of 71 cents a share on revenue of $699 million; analysts expected earnings of 54 cents a share on revenue of $710.1 million. The company now expects fiscal 2013 earnings of between $2 a share and $2.10 a share, better than the $1.98 a share expected by analysts.

Shares were up 4.3%.

Cache ( CACH), the specialty retailer for women, predicted a wider third-quarter loss and weaker sales. Shares plummeted 15.7%.

Datalink ( DTLK) shares dropped 13.4% after the data-center infrastructure and services provider slashed its third-quarter outlook pointing to wary customers who are uncertain about the economic recovery.

ADP (ADP)shares rose 1.1% after Goldman Sachs raised the payroll services provider stock to buy from neutral citing it strong capital allocation, its defensive potential in a challenging economy and robust earnings capabilities.

JPMorgan Chase (JPM) was in the news following a Wall Street Journal report that Barry Zubrow, the bank's regulatory affairs chief, is expected to give up his job. The change is the latest reshuffling at the bank following its multi-billion dollar derivatives trade that went bad back in May. The stock was down 0.26%.




--Written by Andrea Tse and Joe Deaux in New York.



>To contact the writer of this article, click here: Andrea Tse.

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