Updated from 4:14 p.m. ESTWall Street took a dive Friday as an unexpectedly strong jobs report appeared to diminish the chance of an interest rate cut anytime in the near future. The Dow Jones Industrial Average fell 82.68 points, or 0.66%, to 12,398.01, and the S&P 500 was off 8.63 points, or 0.61%, at 1409.71. The Nasdaq Composite surrendered 19.18 points, or 0.78%, to 2434.25. Buyers weren't enticed by the Labor Department's latest report on the U.S. economy, which showed an addition of 167,000 jobs in December, above expectations for a gain more on the order of 100,000 to 115,000. Once again, the prior data were revised higher to reveal that growth was more brisk than first thought. An additional 29,000 jobs were formed through the updated October and November numbers. The unemployment rate remained constant at 4.5%, while average hourly earnings, a key inflation metric, rose a greater-than-expected 0.5%. The Federal Reserve will use the information to help determine the future direction of interest rates. The central bank meets at the end of the month, but no change in the target fed funds rate is anticipated. On Wednesday, minutes from the Fed's meeting last month indicated that members of the FOMC judged core inflation as uncomfortably high. Many traders have been counting on lower rates at some point this year, but the jobs data suggest the Fed won't be in any rush to adopt a dovish stance.
"The equity markets should be on the defensive with this number, as the bullish scenario hinges on a rate cut," said Barry Hyman, equity market strategist with EKN Financial. "Expectations of a Fed rate cut are going to ease, especially with the upward revisions to prior months. This shows that the economy, while slowing, is still maintaining its pace." All told, the Dow finished the shortened week lower by 65 points, or 0.5%, and the S&P 500 was down 8 points, or 0.6%. The Nasdaq, meanwhile, rose about 19 points, or 0.8%. Volume was strong, with 2.86 billion shares changing hands on the New York Stock Exchange. Nearly 2.07 billion shares traded on the Nasdaq. Overall, losers beat winners roughly 3 to 1. Treasuries were lower. The 10-year note fell by 10/32 to yield 4.65%, and the 30-year bond sank 17/32 to lift the yield to 4.74%. The dollar was rallying against most other currencies. By sector, oil stocks were among the few that advanced, with both the Philadelphia Oil Service Sector Index and the Amex Oil Index adding 0.4%. Metal stocks were weak. The Philadelphia Gold & Silver Sector Index slumped 1% and the Amex Gold Bugs Index finished lower by 0.9%. Another big story revolved around the mild turnaround in oil prices. Crude finished higher by 72 cents at $56.31 a barrel in Nymex trading, after futures briefly fell below the $55-a-barrel level earlier. The increase halts a two-session decline that dropped oil prices by roughly 8% this week. Other energy prices were mixed.
are trying to balance the positive impact falling crude will have against the weakening economy," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "We still don't have the data points to suggest a hard landing, but the market is clearly getting nervous that Goldilocks may have been harboring a deep, dark secret." In other commodities, gold was dropped $19.30 to finish at $606.90 an ounce, and silver futures dumped 61 cents to $12.23 an ounce. New York equities have had an up-and-down first week of 2007. On Thursday, tech stocks surged and blue chips rallied late to end slightly higher. The Nasdaq was the star, soaring 30.27 points, or 1.25%, to 2453.43, thanks to an advance in Intel ( INTC). However, after the last session's close, cell-phone giant Motorola ( MOT) chopped its forecast, saying its results for the quarter just ended will be well below analysts' expectations. The warning put pressure on the technology space. Motorola tumbled $1.61, or 7.8%, to $18.94. Elsewhere, Rick Wagoner, the chief executive of the world's biggest automaker, GM ( GM), told a group of reporters that his company will work to fight a threat from Toyota ( TM) to replace it at the top. He said new job cuts might be needed and that the company would pursue added cost savings. GM added 60 cents, or 2%, to close at $30.24. Electronics retailer Best Buy ( BBY) said December same-store sales rose 7% from a year ago, driven by strong results in Canada and online. Best Buy rose 16 cents, or 0.3%, to $50. Rival Circuit City ( CC) posted a 4.5% rise in comp sales for December and boosted its guidance for the fiscal year. However, shares fell 3.6% to finish at $19.29. Among ratings moves, JPMorgan cut Dell ( DELL) to underweight from neutral, citing margin pressure and tough competition in the corporate PC market. Shares finished lower by 8 cents, or 0.3%, at $26.16. Overnight in Asia, Japan's Nikkei fell 1.5% to 17,091, and Hong Kong's Hang Seng rose 0.9% to 20,211. In Europe, London's FTSE 100 was down 1.1% to 6220. Germany's Xetra DAX was off 1.2% to 6593.