Updated from 2:29 p.m. ESTStocks staged a late-afternoon comeback, groping for positive territory as traders attempted to brush off the highest unemployment rate since 1983 and a crises of confidence in some of the who's who of government bailouts. Despite a 24% decrease in General Motors ( GM) shares, the Dow Jones Industrial Average was rising 40 points at 6635, and the S&P 500 added one point to 683. The Nasdaq, though, was falling 6 points still to 1293, with shares of Mac-maker Apple ( AAPL) off by 6% after a gloomy analyst outlook. In arguably the most-anticipated data of the week, the Labor Department said early Friday that non-farm payrolls continued to fall sharply, decreasing by 651,000, basically in line with expectations. Notably, the government also revised the figure for January, to 655,000 from the initial estimate of 589,000. The number of unemployed people rose by 5 million people over the last year to 12.5 million through February. The unemployment rate rose more than expected, to 8.1% in February from 7.6% in January. It's now at its highest rate since 1983. "A cycle of job losses is simply not a future that I will accept," said president Barack Obama on Thursday. The aforementioned General Motors continued to be the worst performer on the Dow a day after the struggling U.S. automaker said in a 10-K filing that auditors have raised "substantial doubt" about its ability to continue as a going concern. The government lent GM billions in aid with the condition that it prove financial viability. A Wall Street Journal report on Friday, however, said that top company executives are "more open to a speedy bankruptcy reorganization financed by the government."
Outside of GM, the market has refocused on financials since the passage of the stimulus package, says Anu Sharma, managing director of the market intelligence desk at NasaqOMX. "It started with AIG, showing that huge loss, and then the government stepping further into Citi -- Citi just broke a dollar, and that's got a lot of people really nervous," he says. "The question is if the government is going to step in, why is
Citi still moving toward a dollar?" asks Sharma. "Another example is General Motors. We keep throwing money at them, and they're still a going concern. All of this ground work is being laid out, and, of course, there's going to be the question of whether it's really working." On Thursday, financials took a beating after Moody's Investors Service said it might downgrade its ratings of Wells Fargo & Co. ( WFC) and Bank of America ( BAC) out of caution for potential loan losses, helping the S&P fell to its lowest level since September 1996, and the Nasdaq below its Nov. 20 closing low. "People are starting to get the sense that we nearing the bottom, regardless of what we see out of Washington," says Sharma. "But traders want to see one huge blowout where they see a severe move to the downside, as much as 600 to 1000 points in a day, washing out speculators, shorts, everybody -- the one big shoe to drop -- and see some sort of baseline form." Early Friday, Wells Fargo ( WFC) slashed its dividend to 5 cents a share from 34 cents. The bank says the move will allow it to retain an additional $5 billion in common equity in 2009.
Meanwhile, Morgan Stanley ( MS) is seeking to lure more high-net-worth clients by offering Federal Deposit Insurance Corp. insurance on deposits ranging from $1 million to $100 million, Dow Jones Newswires reports. Checking in on tech, JP Morgan cut its estimates for cut its estimates for Apple for March and beyond, citing a "deepening global downturn," in a research note Friday. Shares were down nearly 6%. Elsewhere, Dow Chemical ( DOW) and Rohm & Haas ( ROH) both issued reports Friday saying that negotiations are again underway regarding their proposed merger and the related pending lawsuit. Standard & Poor's Ratings Services cut its commercial paper and short-term corporate credit ratings on Dow Chemical on Friday. Both stocks, however, were higher. Dow Chemical added 9% and Rohm & Hass was bettered by 16% on the continued negotiations. In commodities, oil rose $1.91 cents to settle at $45.52 a barrel, while gold rose $14.90 to 942.70 an ounce. Longer-dated Treasuries reversed and were recently lower. The 10-year note was giving up 5.5/32 to yield 2.8%, and the 30-year was lower by 12/32, yielding 3.5%. The dollar was recently weaker against the euro, stronger against the pound, and unchanged against the yen. Stocks overseas were mixed. The FTSE in London and the DAX in Frankfurt were slightly higher. In Asia, Hong Kong's Hang Seng and Japan's Nikkei closed lower by 3.5% and 1.4%, respectively.