The KBW Bank Index (I:BKX) was down 0.4% to close at 63.16, with all but six of the 24 index components showing declines for the session.
The overall stock market see-sawed and the broad indices nearly flat, after the Department of Labor said that nonfarm payrolls in the United States increased by 169,000 during August, with the national unemployment rate improving slightly to 7.4% from 7.3% in July.
The consensus among analysts polled by Thomson Reuters was for the unemployment rate to remain unchanged and for the job-growth figure to come in at 179,000.But what really seemed to rile investors was the Labor Department's downward revision of its June nonfarm payroll growth number to 172,000 from 188,000, and the extreme downward revision of the July job-growth number to 104,000 from 162,000. The Labor department also said that the unemployment rate for 25-34 year olds shot up to 7.8% during August from 7.3% during July, additional uncertainty to the numbers underlining the slow recovery for the housing market and the overall economy. Investors worried over the scope of the Federal Reserve's expected reduction in long-term bond purchases may have taken solace in the confusing employment numbers. The central bank has been making monthly purchases of $40 billion in long-term mortgage-backed securities and $45 billion in long-term U.S. Treasury securities since last September, as part of its policy to hold-down long-term interest rates, known as "QE3." The market yield on 10-Year U.S. Treasury bonds was down six basis points to 2.94%, after hitting its highest level in over two years on Thursday. Investors have pushed the yield on the 10-Year bond up from 1.70% since the end of April, anticipating the Fed's policy change. The Federal Open Market Committee will meet on Sept. 17-18, after which it will announce any change in monetary policy. Some investors are hoping that the decline in mortgage lending volume, along with the mixed bag of employment numbers, might encourage the FOMC to decide on a slight initial reduction in bond purchases.