Futures Drop as Unemployment Rises to 9.8%
NEW YORK (
) -- Stock futures slumped Friday after the U.S. unemployment rate rose to 9.8% and November job growth came in much weaker than expected.
Futures for the
Dow Jones Industrial Average
were down by 47 points, or 36 points below fair value, at 11,316. Futures for the
S&P 500
were down by 6 points, or 4 points below fair value, at 1217, and
Nasdaq
futures were off by 9 points, or 7 points below fair value.
The Labor Department said the U.S. economy added 39,000 jobs in November after adding 172,000 in October. The increase was much weaker than market projections for job growth of 130,000, according to Briefing.com. The unemployment rate climbed to 9.8% -- the highest level since April -- disappointing expectations that it would hold at 9.6%. Meanwhile, private-sector payrolls rose by 50,000, compared to the increase of 140,000 that economists had projected. In October, private-sector payrolls grew by 160,000.
Hourly earnings remained unchanged after rising 0.3% in October, missing expectations for an uptick of 0.1%. November's average workweek was also flat at 34.4 hours, as expected.
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Stocks rallied for a second consecutive day on Thursday as better-than-expected chain-store sales and a jump in pending home sales bolstered confidence in the U.S. recovery.
On Friday, the euro continued to gain ground against the dollar, rising to $1.3252 from $1.3224 as the European Central Bank's decision to
continue offering liquidity to banks eased concerns about sovereign debt. The FTSE in London was up by 0.06% and the DAX in Frankfurt was ahead by 0.1%. Hong Kong's Hang Seng lost 0.5% while Japan's Nikkei gained 0.1%.
The House approved a measure that would extend the current tax rates on those making up to $250,000 but allow higher taxes on higher incomes on Thursday. The vote was seen as largely symbolic since it isn't expected to pass in the Senate.
Members of the National Commission on Fiscal Responsibility and Reform are scheduled to vote on a proposed series of cuts and tax changes that would achieve nearly $4 trillion in deficit reduction through 2020. The plan gained support from two Republican senators on Thursday, bringing votes in favor of the plan to nine. The Commission needs 14 votes to get a quick congressional vote.
At 10 a.m. EST, the Institute for Supply Management will release data on nonmanufacturing activity in November. Economists expect an ISM Services index reading of 54.5, after October's level of 54.3.
At the same time, the Department of Commerce is expected to report a 1.3% decline in October factory orders after an increase of 2.1% in September.
Shares of
Big Lots
(BIG) - Get Report
were down 1% to $30.78 ahead of Friday's opening bell after the retailer missed third-quarter profit expectations by a penny and cut its full-year outlook for earnings from continuing operations to a range of $2.75 to $2.81 a share.
Chevron
(CVX) - Get Report
is selling an 18% stake in an Indonesian deepwater gas field to
Sinopec
(SNP) - Get Report
for $680 million. Shares of Chevron were up by 0.1% to $84.62 while Sinopec's stock was down by 1.1% at $94.95.
Walter Energy
(WLT)
agreed to buy Canada's
Western Coal
for 3.3 billion Canadian dollars ($3.29 billion). Walter Energy's stock was down 2% at $103.50 in early trading.
In commodity markets, the January crude oil contract was up by 13 cents to trade at $88.13 a barrel. The most actively traded February gold contract was down by $1.80 to $1,387.50 an ounce.
The dollar traded lower against a basket of currencies with the dollar index down by 0.3%, and the benchmark 10-year Treasury note weakened 13/32, lifting the yield to 3.047%.
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--Written by Melinda Peer in New York
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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.