Dow Takes Another Hit

The industrials fall for a sixth day, this time after the latest jobs data.
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Updated from 4:18 p.m. EST

A strong start for Wall Street quickly turned into retreat Friday as the latest data on the job market added to the recent string of mixed readings on the health of the economy.

The

Dow Jones Industrial Average

advanced by 43 points early, but reversed ground and closed down 32.5 points, or 0.27%, to 11,986.04, its sixth straight decline. The Dow hadn't closed below 12,000 since Oct. 18, and the industrials now have their longest losing streak since June 2005.

Meanwhile, the

S&P 500

gave back 3.04 points, or 0.22%, to 1364.30, and the

Nasdaq Composite

dropped 3.23 points, or 0.14%, to 2330.79.

Stocks initially responded well after the Labor Department said the economy added 92,000 jobs in October, slightly below expectations for a gain of 125,000 jobs, according to analysts surveyed by

Bloomberg

.

The prior data, however, were stronger than they originally appeared. Payroll numbers for September were revised higher to 148,000 job additions from the previously reported 51,000 gain. August also was higher than first reported, and for those two months together an additional 139,000 jobs were formed.

The unemployment rate fell to 4.4% from 4.6%, the lowest level since April 2001. Average hourly earnings, a key inflation metric, rose a greater-than-expected 0.4%.

For some time, economic reports have been conflicting, and investors now find themselves with employment data pointing to strength on the heels of several reports this week suggesting sluggishness, notably in manufacturing. Two years of rate hikes by the

Federal Reserve

have slowed activity in some areas, while other parts of the economy have continued to zoom along.

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Roughly 2.44 billion shares changed hands on the

New York Stock Exchange

, where decliners beat advancers by a 6-to-5 margin. Volume on the Nasdaq was around 1.88 billion shares, and winners outpaced losers 3 to 2.

By sector, oil stocks were among the few winners of the session. The Philadelphia Oil Service Sector Index rose 3%, and the Amex Oil Index finished higher by 1.8%. Utility stocks were weak, with the Philadelphia Utility Index losing 0.7% and the Dow Jones Utilities Average sinking 0.8%.

As trading got under way this past Monday, the Dow and the S&P 500 were coming off five consecutive up weeks, but that streak has now been broken. The Dow lost 104 points for the five sessions, the S&P 500 slipped 13 points, and the Nasdaq was lower by 20 points. On a percentage basis, each index surrendered 0.9%.

"All in all, coming off such a big rally, it's not that awful," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "There's a lot of uncertainty still out there and a lot of conflicting data this week. We took some profits, and now it's a question about what the Fed will do."

Even though the next Fed meeting is more than a month away, analysts haven't reached a consensus as to whether the central bank will pause for a fourth straight time in its tightening campaign. Equally uncertain is the direction of the Fed's next move. Some market watchers see the next change in rates, whenever that might come, being a cut, but others aren't ruling out further increases.

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"While today's number

for October doesn't jump out, the revisions to previous numbers do," said Ken Tower, chief market strategist with CyberTrader. "This is still indicative of decent economic growth. The average hourly earnings number is a cause for concern, as interest rate yields are now up sharply since the data came out."

Following the economic data, Treasuries plummeted, with the benchmark 10-year note down 30/32 in price to yield 4.71%. The dollar rallied against the world's other major currencies.

"The Federal Reserve is on the horns of a dilemma," said Peter Morici, a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission. "Inflation remains stubbornly high, and growth has slipped to the point of threatening recession. Until the balance of risks tips more toward inflation or recession, expect no change in Federal Reserve interest rate policy."

Elsewhere, the Institute for Supply Management said its services index for October jumped to a reading of 57.1 from 52.9, beating economists' consensus of 54.5. Readings above 50 represent growth in the sector.

However, Ian Shepherdson, chief economist with High Frequency Economics, noted that "the details are softer than the headline sentiment index. In particular, employment dipped to a 27-month low of 51, implying -- if sustained -- nonmanufacturing payrolls trending at just 50,000 or so."

Also pressuring equities was an advance in energy prices. Crude futures jumped $1.26 to close at $59.14 a barrel. Other energy contracts were stronger, as well. Gold finished up $1.40 at $629.20 an ounce, while silver fell 1.5 cents to finish at $12.63 an ounce.

On the corporate side, following the prior session's close,

Qualcomm

(QCOM) - Get Report

posted fiscal fourth-quarter net income of $614 million, or 36 cents a share, up 14% from a year ago. Excluding items, Qualcomm earned 42 cents a share, beating analysts' expectations by a penny. Sales rose 28% to $2 billion, also ahead of estimates. Qualcomm gained 11 cents, or 0.3%, to $36.47.

Medco

(MHS)

beat analysts' third-quarter earnings targets but fell short on revenue as an increase in generic sales ate into its top line. The company also lifted its outlook for this year and next and set plans to repurchase $1 billion in stock. Medco closed lower by 23 cents, or 0.5%, to $50.56.

THQ

(THQI)

, a video-game company, reversed last year's loss and turned a profit in the quarter ended Sept. 30. Revenue climbed 68% from last year to $240 million. Still, THQ gave back 10 cents, or 0.3%, to $30.

The strong report comes a day after another gamemaker,

Electronic Arts

(ERTS)

, easily beat analysts' second-quarter estimates and raised its full-year revenue expectations. Shares soared by $6.24, or 11.8%, to finish at $59.24.