Stocks fall on jobs picture, Intel warning
Technology stocks led Wall Street lower Friday after an uninspiring employment report failed to mitigate investors’ concerns over Intel Corp.’s profit outlook. The major indexes finished the week mixed.
Investors were satisfied with — but not impressed by — the Labor Department’s latest reading on unemployment, which fell to 5.4 percent from 5.5 percent in July, and the 144,000 jobs created in August was close to the 150,000 Wall Street expected.
“I think this continues the pattern of decent economic growth,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “It’s not lighting a fire under anyone, nor is it suggesting the economy is on the edge of a serious contraction. So the market can focus elsewhere, with oil prices likely the biggest hinge for the market right now.”
One day after a sharp drop in crude oil sparked a major stock rally, a barrel of crude was quoted at $43.99, down 7 cents, on the New York Mercantile Exchange.
Meanwhile, profit warnings from Intel continued to weigh on the market, hurting not only technology shares but also raising concerns about third-quarter earnings in other sectors.
The tech-focused Nasdaq composite index dropped 28.95, or 1.6 percent, to 1,844.48.
The Dow Jones industrial average fell 30.08, or 0.3 percent, to 10,260.20, while the Standard & Poor’s 500 index was down 4.68, or 0.4 percent, at 1,113.63.
For the week, the Dow gained 0.6 percent and the S&P rose 0.5 percent, while the Nasdaq fell 1 percent. It was the fourth straight week of gains for the Dow and S&P, while the Nasdaq reversed direction after two positive weeks.
Due to the Republican National Convention and the usual slowdown in trading before Labor Day, volume on the major markets was extremely low during the week. Most of the trading during the week mirrored the vagaries of crude oil prices, which dropped from last months highs of more than $49 per barrel.
While the gain in payrolls fell short of expectations, August’s new jobs were the most created since May and marked a full year of job growth across the nation. Job figures for June and July were also revised upward.
Combined with falling unemployment and a 0.3 percent increase in hourly earnings, the overall jobs picture was somewhat improved over the tepid growth seen this summer. However, analysts have said stronger growth would be needed to assure investors that the economic recovery was still on firm footing.
Intel’s woes spread to other high-tech stocks, as rival Advanced Micro Devices Inc. fell 77 cents to $10.90, Hewlett-Packard Co. slipped 31 cents to $17.70 and Microsoft Corp. was down 51 cents at $27.11. HP, Microsoft and Intel are all Dow components, and their fortunes reflect the health of not only tech stocks, but of the industrial sector as well.
Declining issues outnumbered advancers by nearly 4 to 3 on the New York Stock Exchange, where volume was very light.
The Russell 2000 index of smaller companies was down 3.54, or 0.6 percent, at 556.24.
Overseas, Japan’s Nikkei stock average tumbled 1.2 percent. In Europe, Britain’s FTSE 100 closed up 0.7 percent, while Germany’s DAX index and France’s CAC-40 both climbed 0.9 percent.