Jobs report holds market back

SAN FRANCISCO – U.S. stocks closed lower Friday, with the Dow industrials and S&P 500 suffering losses for the week after a report on the U.S. labor market showed tepid, below-forecast growth in payrolls last month.

The markets were, “for the most part, prepared for the poor (jobs) number,” said Robert Barone, a portfolio manager and partner at Universal Value Advisors in Reno, Nev.

And while there was a reaction to the downside, by the end of the day, the markets were only off by about 1 percent, he said. “Some volatility – yes. Major damage – no.”

The Dow Jones industrial average fell 124.20 points, or 1 percent, to close at 12,772.47. The S&P 500 index fell 12.90 points, or 0.9 percent, to 1,354.68.

The two benchmark indexes have now posted declines for two out of the past three weeks.

The Nasdaq composite index lost 38.79 points, or 1.3 percent, to 2,937.33. It climbed 0.1 percent on the week to score its fifth-straight weekly gain.

“Markets have a lot to digest here,” said Michael Gayed, chief investment strategist at Pension Partners LLC. “We got stimulus from (the Bank of England, People’s Bank of China and European Central Bank) this week, which risk assets would normally see as bullish, but that near-term optimism is being countered by a reminder of the weak jobs market.”

The Labor Department reported the U.S. economy created 80,000 jobs in June, less than the 100,000 expected in a MarketWatch survey of economists. Hiring slowed sharply in the second quarter, with job growth averaging 75,000 a month versus 226,000 in the first quarter.

“Buying stocks and hiring people are both things you do when you want to take risks,” according to Jerry Webman, chief economist at OppenheimerFunds.

Right now, there’s enough uncertainty to keep “investors and employers from wanting to take additional risk,” he said. “That’s reflected both in the employment numbers and in what stocks are doing.”