Record Week Ends on Downer

Updated from 4:21 p.m. EDT

Stocks finished lower Friday as weaker-than-expected jobs data and a selloff at General Motors ( GM) weighed on the major indices.

The Dow Jones Industrial Average, which had closed at record highs for the past three days, ended down 16.48 points, or 0.14%, to 11,850.21, having been down as many as 66 points earlier. The S&P 500 was off 3.64 points, or 0.27%, to 1,349.58, while the Nasdaq Composite lost 6.35 points, or 0.28%, to close at 2,299.99.

Despite Friday's losses, the major indices finished the week with moderate gains. The Dow rose 171 points, or 1.5%, the S&P 500 gained 13.5 points, or 1%, and the Nasdaq was higher by 41.5 points, or 1.8%.

"This was not a bad week, with the Dow surpassing old highs," said Paul Nolte, director of investments with Hinsdale Associates. "We may come back to retest those levels next week. The economic data hung over us today but we saw buyers taking advantage on some names to end the day."

Volume and breadth were weak entering the weekend. About 2.57 billion shares changed hands on the New York Stock Exchange. Decliners beat advancers by a 2-to-1 margin. Volume on the Nasdaq was roughly 1.71 billion shares, with losers beating winners 8 to 7.

GM pressured the Dow, with shares falling 6.3% on news that Jerome York resigned from automaker's board of directors. York is an ally of billionaire investor Kirk Kerkorian, who signaled Friday that he won't increase his stake in the company. The stock slumped by $2.08 to finish at $31.05.

Before the opening bell, the Labor Department said the economy added 51,000 jobs in September, well below economists' expectation for a gain of roughly 123,000 jobs, according to a Bloomberg survey.

The data, however, were somewhat mixed. Payroll numbers for August were revised higher to 188,000 jobs added from the previously reported 128,000. The unemployment rate dipped to 4.6% from 4.7%.

"At first glance, the jobs number points to an economic slowdown," says Ken Tower, chief market strategist with CyberTrader. "However, it's important to recognize last month's significant upward revision. These substantial revisions are viewed as part of today's number and, in that vein, are not as indicative of a slowdown. It seems we're better served to look at the revised data in these cases more than the current number."

Average hourly earnings, a key inflation metric, rose a lower-than-expected 0.2%.

As usual, the employment numbers were looked to for insight into the pace of growth in the U.S. economy and, in turn, the future of Federal Reserve interest rate policy. Even with the next Federal Open Market Committee meeting less than three weeks away, analysts haven't reached a consensus opinion as to whether the Fed will pause for a third straight time in its rate-hike campaign.

"Plenty of economic data has been released in recent weeks that indicate a serious economic slowdown or recession lies ahead," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "On the other side, market-sensitive indicators such as stock market volatility and credit spreads both indicate that investors remain complacent and upbeat about the outlook for the stock market and economy."

Following the economic data, Treasuries reversed, with the benchmark 10-year note down 22/32 in price to yield 4.70%. The dollar strengthened against the world's other major currencies.

"The economy is not falling off a cliff like everyone was lead to believe," said Nolte. "In the bond market, we had such a dramatic move because the odds of a rate cut coming have all but dissipated. We were hoping for a cut and now we're expecting the Fed to pause again instead."

On Thursday, the Dow staged a late-afternoon rally to again close at a record high, as investors brushed past rising oil prices and embraced strong reports from major retailers.

Tower notes the recent rally in the major indices "lost some momentum Thursday as investor focus shifted from big-caps to mid- and small-caps. The major market averages have enjoyed a sharp advance, and that advance is likely to cool a bit here. Investor sentiment readings are approaching a frothy optimism, but they aren't there yet, and the rally is likely to extend."

Crude eased Friday amid reports that OPEC will hold an emergency meeting. It is expected that OPEC will cut oil production by 1 million barrels a day as soon as possible. Oil futures ended down 27 cents to close at $59.76 a barrel.

"Clearly, crude under $58 will elicit a response and short-term resistance should come into play at $64," said Marc Pado, U.S. market strategist with Cantor Fitzgerald.

The tech sector saw pressure after lower-than-expected earnings from chipmaker Micron Technology ( MU). Late Thursday, Micron posted fiscal fourth-quarter earnings of $63.5 million, or 8 cents a share, up 48% from the same quarter a year ago. Sales rose 8% to $1.4 billion from last year. However, results fell shy of the Thomson First Call estimate, and shares dropped $2.40, or 13.7%, to $15.14.

In merger news, Crown Castle ( CCI) agreed to acquire Global Signal ( GSL) for $4 billion in cash and stock, creating a wireless tower giant.

Global Signal was higher by $3.84, or 7.7%, to close at $53.94. Crown Castle slid by $1.65, or 4.8%, to $33.10.

Consumer products company Chattem ( CHTT) signed a deal to acquire five over-the-counter brands from Pfizer ( PFE) and Johnson & Johnson ( JNJ) for a total of $410 million.

Among research notes, Citigroup downgraded retailers Aeropostale ( ARO) and J. Crew ( JCG) to hold from buy. The firm also dropped American Eagle ( AEOS) to sell from hold.

Aeropostale lost 2.7% to $28.83. J. Crew was off 2.6% to finish at $30.61. American Eagle fell by 3.6% to $43.78.

Meanwhile, pharmacy chains Rite Aid ( RAD), Walgreen ( WAG) and CVS ( CVS) ended the session lower after Wal-Mart ( WMT) expanded its lower-priced generic-drug prescription program in Florida, four months ahead of its previous time target.

CVS tumbled 5.2% to $29.32, Rite Aid sank 5.1% to $4.62, and Walgreen lost 1.7% to close at $42.66.

Overseas, European indices ended lower. London's FTSE 100 lost 0.2% to 5991, and Germany's Xetra DAX was off 0.2% at 6063. Stocks edged lower in Asia, as Japan's Nikkei finished 0.1% lower at 16,436 while Hong Kong's Hang Seng was down fractionally to 17,903.

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