Stocks stall, dollar falls on jobs data

By Al Yoon

NEW YORK (BestGrowthStock) – The U.S. dollar fell and stocks’ rally stalled on Friday after the U.S. unemployment rate rose last month, but investors latched onto a larger trend of economic strength and resisted heavier selling.

Gold jumped above $1,400 an ounce on Friday, headed for its biggest weekly gain since April after the jobs data sent the dollar tumbling 1 percent.

Some investors shifted away from riskier assets, lifting prices of U.S. Treasury securities.

Stock in Europe ended slightly lower, but analysts predicted the overall trend is for European markets to push higher despite the disappointing U.S. payrolls figure.

“Every other economic data point has been constructive,” said Phil Orlando, chief equity market strategist, at Federated Investors, in New York.

Wall Street’s rally paused after the Labor Department said U.S. businesses added 39,000 nonfarm payrolls in November, falling short of the 140,000 expected by economists. The unemployment rate rose to a seven-month high of 9.8 percent.

Overall employment for September and October was revised upward to show 38,000 more jobs created than previously estimated.

Other indicators have raised optimism about the economy. Retailers this week reported much stronger-than-expected year-over-year sales in November.

“The market is reading through the weak jobs report to Washington and they are drawing two conclusions — the Fed is not going to be able to abandon quantitative easing in the face of this weak jobs number and if Congress thought they could begin to raise taxes at this point in the fragility of the economic cycle they are sadly mistaken,” Orlando said.

Separately Friday, reports showed the U.S. services sector grew for an 11th straight month in November and new factory orders fell.

The Dow Jones industrial average (.DJI: ) fell 24.18 points, or 0.21 percent, to 11,338.23. The Standard & Poor’s 500 Index (.SPX: ) declined 3.35 points, or 0.27 percent, to 1,218.18 and the Nasdaq Composite Index (.IXIC: ) inched higher by 0.66 points to 2,580.01.

The European benchmark FTSEurofirst 300 (.FTEU3: ) share index declined 0.2 percent to 1,103.97. In Asia trading, the Nikkei (.N225: ) closed 0.1 percent higher.

The MSCI world equity index (.MIWD00000PUS: ) managed a 0.54 percent gain to reach its highest since November 12.

Many analysts viewed the disappointing employment report as an outlier amid a slew of generally positive U.S. data released over the last few weeks that suggest traction for the economy. Strong holiday spending, including all-time highs for online sales on so-called Cyber Monday have made investors more optimistic about year-end.

“If people who are employed are spending money, the unemployment rate is not going to be as important,” said Charles Day, a financial adviser at Morgan Stanley Smith Barney in Purchase, New York.

“The mind-set people are in right now is to look for good news, and the good news of what’s happened over the last two days of the economy turning is overshadowing bad news. Investors are looking for reasons to be in the market.”

For the dollar, however, the U.S. jobs report injected enough caution to create a fresh downdraft on the currency.

The euro-zone debt crisis is expected keep the euro under pressure for some time. European authorities may have bailed out Ireland, but investors are speculating euro-zone nations such as Spain and Portugal will require assistance.

The dollar fell against a basket of major trading-partner currencies, with the U.S. Dollar Index (.DXY: ) down 1.13 percent at 79.397. The euro gained 1.1 percent to $1.3370.

Against the Japanese yen, the dollar slumped 1.36 percent to 82.73 yen.

U.S. Treasury prices jumped as traders unwound short positions after the payrolls data, and others saw softer U.S. growth supporting lower interest rate policy.

The benchmark 10-year Treasury yield declined 0.03 percentage point — from its highest level since July — to 2.97 percent.

European shares and the euro drew support among chatter that the European Central Bank was in the market for bonds from euro-zone nations in danger of rising borrowing costs and in possible need of bailouts.

Portugal’s five-year credit default swaps tightened further by midday to 409 basis points from 448 basis points, data from Markit showed, while the premium paid for 10-year Portuguese debt over German bunds declined.

In commodities, U.S. light sweet crude oil rose 36 cents, or 0.41 percent, to $88.36 per barrel.

(Additional reporting by Rodrigo Campos and Gertrude Chavez-Dreyfuss in New York, and Simon Jessop in London; Editing by Kenneth Barry)

Stocks stall, dollar falls on jobs data