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Stocks mixed as investors work through jobs report
NEW YORK — The stock market wasn’t sure what to make of the government’s latest jobs report.
The government reported Friday morning that the U.S. added jobs in November, and stock index futures shot higher in pre-market trading. Then, as traders dived into the details of the report, their reaction became more tempered.
The Dow Jones industrial average jumped 71 points in early trading before trimming in its gains. By mid-afternoon, it was up 51 points to 13,125.
The Standard & Poor’s 500 shot up, then bounced between small gains and losses. The Nasdaq opened higher, then turned negative in the morning and stayed there throughout the day.
The headline numbers from the jobs report were what sent the market higher in early trading. The Labor Department said the U.S. added 146,000 jobs last month. The unemployment rate fell to 7.7 percent from 7.9 percent, the lowest in nearly four years.
The overall report, however, painted a more restrained view of the economy.
“If you delve into that report a little more, there are some disturbing issues,” said Brian Lund, who is based in Los Angeles as executive vice president and co-founder of the online brokerage Ditto Trade.
The unemployment rate fell largely because discouraged unemployed workers stopped looking for work, which meant they were no longer counted among the unemployed. Also, the Labor Department revised previously released jobs numbers downward, saying that employers added 49,000 fewer jobs in October and September than initially estimated.
Lund also wasn’t so sure about the government’s statement that Hurricane Sandy “did not substantively impact” the unemployment numbers. He expected Sandy’s detrimental effects to show up in jobs reports over the next couple of months, as businesses figure out their post-storm plans.
“If you have Sandy, you don’t automatically lose your job,” Lund said. “Businesses take time to say, ‘Oh, what’s going on, can we go forward, do we need to cut people to survive? It’s not until later that they start laying off.”
At mid-afternoon, the S&P 500 was essentially flat, up less than a point at 1,414. The Nasdaq composite index, weighed down by Apple, was down 17 to 2,973.
The yield on the benchmark 10-year Treasury note rose to 1.63 percent from 1.59 percent late Thursday, a sign that investors were putting more money in stocks.
Nicholas Colas, chief market strategist for ConvergEx in New York, was similarly unimpressed by the jobs numbers. In a note to clients, he said U.S. unemployment seems to be more consistent with “an ongoing recession than expansion.”
In the recession of the early 1990s and its aftermath, the highest rate of unemployment was 7.8 percent. In the recession of the early 2000s and its aftermath, the unemployment rate never got above 6.3 percent.
This time has been harsher. In late 2009, shortly after the recession officially ended, the unemployment rate peaked at 10 percent. For two years after that, it stayed above 9 percent.
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