Stocks stumble after unemployment rises to 9.8 pct
An unexpected increase in the U.S. unemployment rate pushed stocks down Friday as investors moved money into safer assets.
The unemployment rate climbed to a seven-month high in November as employers added only 39,000 jobs. Economists had forecast a gain of 145,000.
The unemployment rate climbed to 9.8 percent from 9.6 percent.
Investors had hoped that a strong jobs report would help extend a two-day stock rally. Expectations of job growth rose Wednesday after a report showed that hiring at small businesses increased to the highest levels in three years. That along with signs of stronger retail spending pushed the Dow Jones industrial average up 356 points over Wednesday and Thursday.
“In order for stocks to push through their highs for this year, we’re going to need a positive number on the jobs front,” Todd Salamone, the director of research at Schaeffer’s Investment Research, had said before the report.
The Dow Jones industrial average was down 24.82, or 0.2 percent, to 11,337.59 in morning trading.
All but 8 of the 30 stocks that make up the Dow fell. DuPont led the index with a 1 percent gain.
The broader Standard and Poor’s 500 index fell 3.45, or 0.3 percent, to 1,218.08. The index is 0.5 percent below the 2010 high it reached Nov. 5.
The Nasdaq composite index fell 3.06, or 0.1 percent, to 2,576.29.
Bond prices rose after the jobs report as traders bought safer assets. The yield on the 10-year Treasury fell to 2.97 percent from 3.00 percent late Thursday. That yield helps set interest rates on many kinds of loans including home mortgages.
The weak jobs report served as a reminder that the recovery is proceeding fitfully. Economists say it will take up to 300,000 new jobs a month to reduce the unemployment rate significantly.
“The U.S. may have to face the fact that unemployment is going to be high for a long time,” said Drew Matus, a senior economist at UBS. “There are people who need to be retrained for new jobs and that will take time.”
In corporate news, discount retailer Big Lots Inc. fell 4 percent after reporting that its third-quarter income fell 42 percent.
Stocks overseas fell. The Euro Stoxx 50 index, which tracks blue chip companies in countries that use the euro, was down 0.3 percent. Hong Kong’s Hang Seng Index was down 0.6 percent.
The dollar fell 0.9 percent against an index of six currencies. Gold and other commodities rose.