Uncertain investors pushed stocks lower in a meandering session Friday as a key government jobs report failed to answer Wall Street’s lingering questions about the economy and interest rates. The major indexes ended the first week of 2005 with a loss.
Investors were unsure how to read the latest Labor Department job creation report, which showed 157,000 jobs created in December — less than the 175,000 expected, but still high enough to show continued growth in the labor market and hopefully stave off inflation and higher interest rates from the Federal Reserve.
But with wage growth slipping, according to the Labor Department, and a wave of corporate earnings releases due next week, investors remained skittish about placing large bets. The major indexes drifted in and out positive territory throughout the session before settling slightly lower.
“I think some people were looking for a bit more wage growth, better figures in the jobs report,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “We’re in an oversold market just catching its breath before the weekend, and after that, it’s all about earnings.”
The Dow Jones industrial average fell 18.92, or 0.18 percent, to 10,603.96.
Broader stock indicators saw modest losses. The Standard & Poor’s 500 index was down 1.70, or 0.14 percent, at 1,186.19, and the Nasdaq composite index dropped 1.39, or 0.07 percent, to 2,088.61.
The first week of 2005 was a difficult one for Wall Street, as the major indexes fell four out of the five sessions. Profit-taking from the strong rally in November and December, combined with fresh fears about inflation and higher interest rates, stole momentum from buyers and caused many investors to cash in their recent profits.
For the week, the Dow lost 1.66 percent, the S&P fell 2.12 percent and the Nasdaq tumbled 3.99 percent.
Investors this week were primarily concerned that the Federal Reserve might hasten its plans to raise the nation’s benchmark interest rate, which stands at 2.25 percent. In the minutes of its Dec. 14 meeting, released Tuesday, the Fed raised concerns about possible inflation. Mediocre job growth, however, was seen as a buffer against faster or steeper rate hikes, since companies will likely want cheaper capital in order to create jobs.
The week’s downward trend doesn’t bode well for those who believe in the “January indicator,” a maxim that claims the market’s direction for the year can be divined by its performance over the first five days of January. While the January indicator works well for a positive week — the market has risen for the year 29 out of 34 years when the first week of trading was positive — a down week has equated to a down year only 10 out 20 years.
Declining issues outnumbered advancers by about 8 to 5 on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies was down 6.61, or 1.07 percent, at 613.21.
Overseas, Japan’s Nikkei stock average fell 0.51 percent. In Europe, Britain’s FTSE 100 closed up 0.62 percent, France’s CAC-40 climbed 0.56 percent for the session, and Germany’s DAX index gained 0.36 percent.