Stocks End With Losses

The session was a roller coaster as traders balanced the jobs report with the impact of Hurricane Katrina.
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Updated from 4:08 p.m. EDT

Stocks closed a choppy session to the downside Friday, as traders balanced the latest jobs data with continuing questions about the ultimate economic effects of Hurricane Katrina.

The

Dow Jones Industrial Average

finished down 12.26 points, or 0.12%, to 10,447.37, and the

S&P 500

was lower by 3.57 points, or 0.29%, at 1218.02. The

Nasdaq Composite

lost 6.83 points, or 0.32%, to 2141.07. The 10-year Treasury was unchanged in price to yield 4.03%, while the dollar fell against the yen and the euro.

"Now that we're finally at the end of the week, we're a little calmer about the implications and repercussions from the storm," said Paul Nolte, director of investments with Hinsdale Associates. "But so much production and distribution goes through the area that the lasting impacts will be much further-reaching than other disasters."

Nolte added that "next week we'll have to watch the clean-up efforts and the disruption in oil, as most of the economic news will be discounted as it's all pre-Katrina."

Despite uncertainty in the aftermath of the storm, the S&P 500 gained 1.07% while the Nasdaq rose 0.96% for the week. The Dow was up 0.48%. U.S. markets will be closed Monday for the Labor Day holiday.

About 1.26 billion shares changed hands on the

New York Stock Exchange

, with decliners beating advancers by a 9-to-7 margin. Trading volume on the Nasdaq was 1.14 billion shares, with decliners outpacing advancers nearly 2 to 1.

Before the market opened, the Labor Department said 169,000 jobs were added to nonfarm payrolls last month, a slightly lower-than-expected number that was offset by an addition to July's gain. The unemployment rate dipped to 4.9% from 5%, the lowest level since August 2001, while wage pressures were benign.

August's jobs data helped build a case that

Federal Reserve

policymakers can afford to pause their rate-tightening campaign in the wake of Katrina and gave traders a chance to focus on something other than the grim scenes coming from New Orleans and the Gulf Coast.

Energy Secretary Sam Bodman said at a press conference Friday that the Energy Department will release 30 million barrels of crude and that the International Energy Agency will release 60 million barrels of oil and gas over the next month.

Still, even as energy futures eased they remained distressingly high after a big rally in gasoline futures this week, reflecting supply disruptions caused by Hurricane Katrina. Crude for October delivery fell $1.90 to close at $67.57 a barrel in Nymex floor trading, helped lower by news that several pipelines had resumed operation in the Southeast.

At the same time, the crucial Louisiana Offshore Oil Port is now offloading petroleum from tankers at a 50% rate, according to reports.

Unleaded gasoline for October fell 22 cents to $2.18 a gallon. Word of improvements in the pipelines comes at a critical time, as reports are trickling out of gas shortages in parts of the country and fuel going for more than $3 a gallon in many areas.

While the employment report is usually the single most important piece of regularly scheduled news that Wall Street digests, the impact of Friday's number will obviously be diluted by the events of the last week.

"Because of Hurricane Katrina, my feeling is that the number is irrelevant and won't be comparative going forward," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "Given that, it's moderately positive. It shows that the economy pre-Katrina continued to grow. Again, it's a decent number that will prevent any worries about an already weak economy before the hurricane. However, it's not a market-moving story today, because other things take priority."

Michael Sheldon, chief market strategist at Spencer Clarke, says, "Investors will be asking themselves over the next few days and weeks to come, will the Fed stop tightening, will GDP be severely impacted over the next couple of quarters, and when will the refineries be up and running?"

Wall Street awoke to more harrowing scenes from New Orleans, where the federal rescue and evacuation effort continues to battle chaotic ground conditions that reportedly include gunfire, rape and pillage. A Mississippi River chemical plant was ripped by an explosion this morning, and fires burned elsewhere in the city.

Officials say fumes from the plant blast aren't a toxic threat.

Congress met Friday to pass a $10 billion emergency spending bill requested by the Bush administration. The U.S. military has vowed to send 30,000 National Guard troops to storm-ravaged Gulf Coast areas, including 4,200 military police for New Orleans by Sunday.

Assessing Katrina's economic impact remains a convoluted and frustrating enterprise that must embrace insured losses, the impact on energy prices, damage to health care infrastructure and fresh problems for the travel and tourism industry.

Hanover Re, a large European reinsurance company that issued a Katrina-related profit warning Friday, pegged the storm's overall cost to the insurance industry at $30 billion. That would make it the costliest U.S. disaster ever.

The impact of surging fuel prices is creating stress throughout the transportation industry and has accelerated the cash crunch at one teetering airline,

Northwest

(NWAC)

. In an

Securities and Exchange Commission

filing late Thursday, Northwest said its cash had fallen to $1.7 billion from $2.1 billion in the space of a month.

Around the country and particularly in the Southeast, gasoline grew scarce at the retail level, with shortages reported from Florida to Massachusetts, Virginia to Wisconsin. At least 10% of the nation's oil refining capacity remains offline in Katrina's wake, while other refiners are having trouble finding feedstock to turn into gasoline.

The Energy Department continues to field complaints of price-gouging around the country, a practice President Bush warned won't be tolerated in a speech Thursday. Bush also counseled conservation.

"Americans should be prudent in their use of gasoline over the next few weeks," Bush said. "Don't buy gas if you don't need it."

On Friday, stronger sectors included airlines and retail. Laggards included integrated oil, oil refiners and homebuilding.

In corporate news,

Boeing's

(BA) - Get Report

machinists' union voted to reject the company's proposed contract offer, sending workers on strike. The move will stop the company's production for the first time in about 10 years. Boeing slid $1.65, or 2.5%, to $64.34.

Johnson & Johnson

(JNJ) - Get Report

said Friday it will sell its Cordis business in Canada in order to gain antitrust clearance in that country for the purchase of

Guidant

(GDT)

. J&J lost 23 cents, or 0.4%, to close at $62.90.

H&R Block

(HRB) - Get Report

reported a 26% increase in first-quarter revenue late Thursday. The tax company lost $28.3 million, or 9 cents a share, compared with a loss of $36.7 million, or 11 cents a share, a year ago. The firm also reiterated its earnings guidance for the fiscal year. Shares fell 63 cents, or 2.3%, to $26.80.

Also late Thursday,

JDS Uniphase

(JDSU)

posted a loss of $145.7 million, or 10 cents a share, which includes a one-time impairment charge of $62.7 million. Last year, the company lost $22 million, or 2 cents a share. Sales dipped to $170.9 million from $174.5 million a year earlier. On an adjusted basis, JDS had a loss of 2 cents a share, matching analysts' expectations.

JDS also lowered its guidance on its core business but said an acquisition will boost the top line in the current quarter. The stock was down by a penny, or 0.7%, to close at $1.53.

Among ratings moves, Merrill Lynch reiterated a buy rating for

General Electric

(GE) - Get Report

, saying it still believes GE has strong fundamentals and may step up its share-repurchasing program in the fourth quarter. GE added 19 cents, or 0.6%, to $33.33.

A.G. Edwards upgraded

American International Group

(AIG) - Get Report

to buy from hold, saying the insurance company's earnings have remained strong despite regulatory probes in to the company. The brokerage also raised its 2005 earnings estimates for the company. AIG dipped 2 cents, or 0.03%, to $59.33.

Overseas markets were mixed with London's FTSE 100 unchanged at 5327, while Germany's Xetra DAX was down 0.1% to 4838. In Asia, Japan's Nikkei rose 0.7% overnight to 12,600, while Hong Kong's Hang Seng added 0.5% to 15,222.