Markets Break for Jobs

Ahead of the jobs data, the stock market was weaker Thursday, dragged down by declines in the homebuilder stocks and the energy sector. Bonds were mostly unchanged.

The Dow Jones Industrial Average fell 0.3% to close at 12,278.41, while the S&P 500 slid 0.4% to close at 1407.29 and the Nasdaq Composite slid 0.7% to close at 2427.69.

The 30-year Treasury bond slid 4/32 to yield 4.61%, while the 10-year and the two-year notes were unchanged, yielding 4.49% and 4.58%, respectively.

The dollar was relatively strong Thursday against the euro and the yen, despite a 25-basis-point rate hike by the European Central Bank, which brought its overnight borrowing rate to 3.5%. Higher rates in Europe and other countries diminish the attractiveness of the dollar on a relative basis.

Moderating the dollar's fall were slightly less hawkish words from ECB President Jean-Claude Trichet at a news conference Thursday. Trichet upped Europe's growth forecast, but pulled back on inflation expectations and said a rate hike in February is not a foregone conclusion.

The ECB rate hike highlights the current global paradox in which Europe and other economies are worried about overheating growth as the U.S. is in a soft patch. This paradox underscores the dollar's recent weakness, and once again puts more weight on the payrolls report.