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Flat Finish for Wall Street

Robert Holmes

Stocks had an upbeat start after government employment data was right in line with estimates Friday, but the early gains gradually faded and the market ended little changed.

The Dow Jones Industrial Average added 15.62 points, or 0.13%, to 12,276.32. The S&P 500 was up 0.96 point, or 0.07%, at 1402.85, and the Nasdaq Composite was lower by 0.18 point, or 0.01%, at 2387.55.

On the Dow, only 14 of its 30 components finished with gains, led by a 2.2% rise in Alcoa (AA Quote).

Meanwhile, losses in Amgen (AMGN Quote), Sirius Satellite Radio (SIRI Quote), XM Satellite Radio (XMSR Quote) and CH Robinson Worldwide (CHRW Quote) combined to sink the Nasdaq.

Roughly 2.68 billion shares changed hands on the New York Stock Exchange. Advancers beat decliners by a 3-to-2 margin. Volume on the Nasdaq reached 1.93 billion shares, with winners outpacing losers 8 to 7.

Over the last five sessions, the Dow added 1.3% and the S&P 500 gained 1.2%, compared to heavy losses the previous week. The Nasdaq rose 0.8% for the week.

The jobs report, one of the most important pieces of data the government releases every month, showed that 97,000 workers were added to U.S. payrolls in February. Economists had expected 95,000 positions to have been created, according to a Bloomberg poll.

The jobless rate eased to 4.5% from 4.6%. No change had been anticipated. Average hourly earnings, a key inflation metric, rose a greater-than-expected 0.4%.

"The stock market has been fairly volatile, as it appears investors are divided between an optimistic growth forecast and a pessimistic one," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Today's jobs report is a perfect example of where you can see a positive and as well as a negative. That gave us this very choppy trading."

Meanwhile, in what is becoming common, job growth for the prior two months was revised upward. The government now says 55,000 more employees were put to work in December and January than had been first thought.

"We were expecting far more weakness," said Paul Mendelsohn, chief investment officer with Windham Financial. "To come in on target and have upward revisions to previous months, it shows that the 'Goldilocks' scenario is still in place. This takes a lot of the fear out of the market."

Fixed-income traders sent yields soaring, as the report showed a stronger economy than previously thought. The 10-year note fell 19/32 in price, yielding 4.59%, and the 30-year bond sank 1 2/32 to yield 4.72%.

"Bond yields had been coming down on anticipation we were headed for an economic slowdown," added Mendelsohn. "Today's reading shows, from an employment point of view, that the economy is still strong and on track. It should be expected that bond yields would rise."

The report comes less than two weeks before the next Federal Reserve meeting. The central bank will meet for the second time this year on March 20 for the start of a two-day meeting, but no change in the target fed funds rate is expected.

Additionally, the Commerce Department said the U.S. trade deficit narrowed to $59.1 billion in January from $61.2 billion in December. Economists expected the trade deficit would shrink to $60 billion.

Turning to global markets, Asia was mixed overnight. Tokyo's Nikkei 225 was ahead by 0.4% to 17,164, but Hong Kong's Hang Seng gave back 0.2% to 19,135. Mainland China's Shanghai and Shenzhen 300 Index was weaker by 0.6% at 2611.

On the corporate side, Procter & Gamble (PG Quote) reaffirmed its forecast for the March quarter, including its call for a profit of 72 cents to 74 cents a share. Analysts are expecting P&G to hit the high end of its guidance. P&G was off by 15 cents, or 0.2%, to finish at $62.16.

Embattled New Century (NEW Quote) dropped more than 17% after the company said it has stopped accepting new loan applications. The move adds fuel to the rumors that the subprime mortgage lender will file for bankruptcy.

Shares fell by 66 cents to $3.21. New Century has now dropped 90% from its 2006 close of $31.59.

Yahoo! (YHOO Quote) faced pressure after The Wall Street Journal reported that the Internet giant may scale back its partnership with AT&T (T Quote). Yahoo! sank $1.59, or 5.2%, at $29.12.

Among ratings changes, Stifel Nicolaus upgraded FedEx (FDX Quote) to buy from hold, and the stock was higher by $1.08, or 1%, to close at $114.67.

The firm also raised Texas Instruments (TXN Quote) to buy from hold, saying the chipmaker's overstock inventory has been reduced. Shares rose 76 cents, or 2.4%, to $32.46.

At the New York Mercantile Exchange, energy futures were lower. Crude oil slid $1.59 to $60.05 a barrel, and natural gas was off 15 cents at $7.08 per million British thermal units.

Metals prices slipped. Gold was off by $3.50 to $652 an ounce, and silver eased 15 cents to $12.97 an ounce.