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US stocks mixed after unemployment rate drops
A big drop in the unemployment rate wasn't enough for investors Friday. Stocks posted gains early in the day but faded to a mixed close. The Labor Department said the unemployment rate had declined to 7.8 per cent, its first dip below 8 per cent in nearly four years. The decline from 8.1 percent the month before was bigger than economists had expected.
Stocks rose on that news, but the gains didn't last. The Dow Jones industrial average edged up 34.79 points to close at 13,610.15, after rising 86 points earlier in the day. The Standard & Poor's 500 index fell 0.47 points to 1,460.93, and the Nasdaq dropped 13.27 points to 3,136.19.
US employers added 114,000 jobs last month. That was in line with what economists were expecting, but the government also revised its estimates higher for job growth in July and August. The drop to 7.8 per cent in the unemployment rate "really is not a big game-changer," said Peter Cardillo, chief market economist at Rockwell Global Capital. "Yes, more people were hired, but job creation did come in in line with expectations."
"The jobs report today was just a validation that things are improving and that people are feeling good," said Marty Leclerc, chief investment officer of Barrack Yard Advisors. "So as investors, of course, that's when we're most apprehensive." Consumer discretionary stocks rose, led by Home Depot and Lowe's, both up more than 2 per cent. Industrial stocks also rose. Technology and energy stocks had broad declines.
Despite the mixed day, the Dow managed to reach a milestone: its highest close since December 2007. The S&P is close, but not quite back to, its December 2007 high. The Dow and S&P had their first positive weeks after two weeks of losses. The Dow rose 1.3 per cent for the week, the S&P 1.4 per cent. US stocks making noteworthy moves included:
— Apple fell US$14.21, or 2.1 per cent, to US$652.59, causing the Nasdaq to perform worse than other indexes.
— Zynga plunged 33 cents, or 11.9 per cent, to US$2.48 after the online game maker said that it expects a third-quarter loss due to weak demand and a charge related to an acquisition.
— Dow component Hewlett-Packard fell 21 cents to US$14.73. Moody's Investors Service said it was reviewing its investment-grade credit rating for a possible downgrade after the PC and printer maker cut its profit forecast.
— Avon Products rose US$1.17, or 7.2 per cent, to US$17.39 after announcing that its chairman and former CEO Andrea Jung will step down at the end of the year. Jung had come under fire for failing to reverse the company's declines and wrap up a bribery investigation.
— Constellation Brands rose US$1.48, or 4.3 per cent, to US$36.20. The wine and liquor company's quarterly results beat Wall Street's forecasts, and it raised its full-year forecast.
Stocks rose in Europe, too. The FTSE 100 index of leading British shares was up 0.7 per cent, while Germany's DAX rose 1.3 per cent and the CAC-40 in France was up 1.6 per cent. The dollar was trading steadily across a range of currencies, with the euro down slightly at US$1.303. The yield on the 10-year US Treasury note rose to 1.73 per cent from 1.68 per cent as investors shifted money from bonds into stocks.
The price of oil fell despite the better US jobs figures as investors booked gains from a big rise caused by concerns over the recent clashes between Turkey and Syria. The benchmark New York crude oil price fell US$1.83 to US$89.88 per barrel.
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