Jobless rate falls, but so do stocks

Updated: 7:28 p.m. ET

The news on the jobs front in December was better than expected, but investors did not celebrate. Instead, stocks ended the day flat or modestly lower.

The U.S. unemployment rate fell to 8.5%, its lowest level since February 2009, from November's 8.7%. The consensus estimate had been for an 8.7% rate. The economy created an estimated 200,000 jobs; the consensus was for 155,000 jobs. The jobs gain was the best since February.

The market reacted to the jobs report by falling at the open, with the Dow Jones industrials ($INDU) off as many as 83 points by 9:50 a.m. ET. One reason was concern over Europe; the euro fell below $1.28, finishing at its lowest level since September 2010. The euro's decline pushed crude oil (-CL), gold (-GC) and silver (-SI) lower.

The market did rebound from its morning lows, thanks to gains in financial stocks, but faded a bit in the last hour of trading. Bank of America (BAC) fell to as low as $6.06, then recovered  to $6.30 before dropping back to $6.18, down 13 cents.

The Dow closed down 56 points to 12,360, after nearly pushing into the black just before noon. The Standard & Poor's 500 Index ($INX) was off 3 points at 1,278. But the Nasdaq Composite Index ($COMPX) was up 4 points to 2,674. the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, ended up 7 points to 2,356.

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The market's early swoon -- followed by a bit of a crawl-back -- mirrored Wednesday and Thursday.  The S&P 500 looked like it might fall below 1,274, which had emerged as a support level. The support held, and there's chatter the index ultimately could make a run to 1,292 -- its intraday high on Oct. 28. 

The first week of 2012 will end with a 1.2% gain for the Dow, a 1.6% gain for the S&P 500 and a 2.7% gain for the Nasdaq. That is a better start for the indexes than the first week of 2011, when the Dow rose 0.8%, with the S&P 500 up 1.1% and the Nasdaq up 1.9%. But just about all of the market's gain for the week came on Tuesday, when the Dow jumped 180 points.

Markets for the week
			1/6/2012			12/30/2011			% chg.			YTD chg.
Dow Industrials			12,359.92			12,217.56			1.17%			1.17%
S&P 500			1,277.81			1,257.60			1.61%			1.61%
Nasdaq			2,674.22			2,605.15			2.65%			2.65%
Russell 2000			749.71			740.92			1.19%			1.19%
Crude oil			$101.56			$98.83			2.76%			2.76%
(per barrel)
U.S. Dollar Index			81.60			80.52			1.34%			1.34%
10-yr. Treasury			1.96%			1.87%			4.81%			4.81%
Gold			$1,616.80			1,566.80			3.19%			3.19%

About those jobs numbers
The jobs numbers were greeted with some wariness, if only because there are so many head winds facing the domestic economy: Europe, tenuous consumer confidence, high energy prices and a weak housing market.

The economy has created 1.64 million jobs in the last 12 months. That is the net of 1.92 million jobs added in the private sector and 280,000 government jobs lost, mostly at the  state and local levels.

There were gains in retail, health care and manufacturing. More than 500,000 retail and health care jobs have been created in the last year. Manufacturing added 225,000 jobs, its best showing since 1997. On a percentage basis, manufacturing's 1.7% gain was its best since 1984 and came after 12 straight years of decline.

Automobile and related manufacturing added 50,000 jobs, the biggest gain since 1994. (But the industry is also employing 595,000 fewer workers than in 2000.)

There were things not to like: Temporary employment fell 8,000. The lack of bad weather may have made the situation look better than it is. A 42,000 gain in couriers and messengers is basically hiring by FedEx (FDX) and United Parcel Service (UPS) for the holidays. Most of those jobs will disappear in January and February.

The so-called alternative measure of unemployment, which includes people working part time or who dropped out of the work force, was 15.2%, an improvement from November's 15.6% and 16.6% in December 2010. But still too high.

A total of 5.6 million people, or 42.5% of those out of work, have been unemployed for 27 weeks or longer.

About 15.7% of African-American men were out of work, although that's down from November's 16.4% and December 2010's 16.8%.

Reactions from economists varied. "This is the real deal for the U.S. economy, at last," wrote Ian Shepherdson of High Frequency Economics. "Wage gains are still very modest, up just 0.2% in December, but the key point is that job growth is accelerating, and there is more to come."

"While the report is encouraging," said Nigel Gault of IHS Global Insight, "we can't take it as proof that the economy has broken out to a much stronger rate of job creation."

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$101.56			$101.81			2.76%			2.76%
(per barrel)
Heating oil (-HO)			$3.0702			$3.0388			5.35%			5.35%
(per gallon)
Natural gas (-NG)			$3.0620			$2.9800			2.44%			2.44%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.7516			$2.7365			3.54%			3.54%
(per gallon)
Brent crude			$113.06			$112.74			5.29%			5.29%
(per barrel)
Retail gasoline			$3.3520			$3.3190			2.54%			2.54%
(per gallon; AAA)

Crude drops; gold down, then up
Crude oil fell 85 cents to $100.99 a barrel as the euro fell. Brent crude was down 48 cents to $112.51.

Gold dropped to as low as $1,609 an ounce, then recovered to settle at $1,616.80, off $3.30. Silver settled down 61.3 cents to $28.68 an ounce. Copper (-HG) was up slightly to $3.435 a pound.

The euro's decline to $1.2765 was a signal that investors were looking for safety. The 10-year Treasury yield dropped to 1.961% from Thursday's 1.993% .

The euro fell on continuing worries about its government debt crisis and pressure on European bank stocks.

In addition, reports showed confidence in the European economic outlook fell to a two-year low. German factory orders dropped by the most in almost three years. The euro may finish with its fifth weekly loss against the dollar in the last six.

Stocks in Germany and France fell slightly. British stocks were higher.

Microsoft and Disney lead the Dow
Only 10 of the 30 Dow stocks were higher today, led by Microsoft (MSFT), up 42 cents to $28.10; Walt Disney (DIS), up 41 cents to $39.91, and McDonald's (MCD) up 77 cents to $100.60. (Microsoft publishes MSN Money.)

The laggards were Alcoa (AA), down 20 cents to $9.16, and Bank of America. The biggest U.S. aluminum producer will close 12% of its global smelting capacity. The decision means a permanent shutdown of its smelter in Alcoa, Tenn., near Knoxville. The problem: Prices have slumped because global supply exceeds demand. Alcoa will report fourth-quarter results after Monday's close.

Bank of America shares fell after an Obama administration official denied speculation that the White House is considering a trillion-dollar plan to refinance home loans. The bank surged Thursday above $6 for the first time since November amid speculation about a refinancing program.

Financial stocks did weaken at the end of the part, partly because analyst Meredith Whitney cut earnings estimates for Goldman Sachs (GS) and Morgan Stanley (MS). Goldman Sachs was off $1.16 to $93.42; Morgan Stanley dropped 38 cents to $15.90. Both stocks, however, moved up for the week.

Fifty-one Nasdaq-100 stocks were higher, led by Netflix(NFLX), up $6.99 to $84.29. Some investors clearly see the company's problems as diminishing. The stock rose 25% this week alone.

Apple (AAPL) was up $4.37 to $422.40 and rose 4.3% for the week. The Apple Insider blog said Apple may open mini-stores in perhaps as many as 25 Target (TGT) locations. The locations would be in markets that can't support a stand-alone Apple store. Target was up 44 cents to $48.95.

A total of 208 S&P 500 stocks were higher, led by Netflix and for-profit education company Devry (DV), up $2.35 to $41.40.

Leaders and laggards
Apollo Group (APOL), up $2.92 to $56.64. The operator of the University of Phoenix and the biggest U.S. for-profit college reported fiscal-first-quarter​ profit and sales that topped analysts’ estimates as more new students signed up for classes.

Dendreon (DNDN), up $1.73 to $12.35. The maker of the prostate-cancer drug Provenge increased for a second day on optimism that sales of the company’s only product will rise after Dendreon said revenue from Provenge more than tripled in the fourth quarter.

Family Dollar Stores (FDO), down $4.33 to $53.63. The discount retailer reported fiscal-first-quarter​ revenue of $2.15 billion, missing the consensus estimate of $2.17 billion. Comparable store sales increased 4.1%, compared with the average analyst estimate of 4.9%.

Jazz Pharmaceuticals (JAZZ), up $3.93 to $45.39. The drug maker said earnings in 2012 will be as much as $4.15 a share, compared with the average analyst estimate of $3.39. The forecast reflects earnings after the company completes the acquisition of Azur Pharma.

RF Micro Devices (RFMD), down $1.10 to $4.54. The maker of chips and radio systems for mobile phones cut its forecast for fiscal-third-quarter​ revenue to $225 million from $250 million. The company was cut to "market perform" from "outperform" at Oppenheimer & Co. The company blamed weaker-than-expected​ sales of 2G components to China-based customers for entry-level handsets, among other things.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0200%			0.050%			100.00%			100.00%
5-year Treasury note			0.856%			0.878%			3.13%			3.13%
10-year Treasury note			1.961%			1.993%			4.81%			4.81%
30-year Treasury bond			3.016%			3.057%			4.40%			4.40%
Currencies
U.S. Dollar Index			81.597			81.250			1.34%			1.34%
British pound			1.5463			1.5501			-0.48%			-0.48%
(in U.S. $)
U.S. $ in pounds			£0.647			£0.645			0.48%			0.48%
Euro in dollars			$1.28			$1.28			-1.48%			-1.48%
(in U.S. $)
U.S. $ in euros			€ 0.783			€ 0.782			1.50%			1.50%
U.S. $ in yen			77.40			77.10			0.39%			0.39%
U.S. $ in Chinese			6.33			6.30			0.13%			0.13%
yuan
Canada dollar			$0.980			$0.000			-0.09%			-0.09%
(in U.S. $)
U.S. dollar			$1.021			$1.019			0.08%			0.08%
(in Canadian $)
Commodities
Gold (-GC)			$1,616.80			$1,620.10			3.19%			3.19%
(per troy ounce)
Copper (-HG)			$3.435			$3.427			-0.03%			-0.03%
(per pound)
Silver (-SI)			$28.6830			$29.2960			2.75%			2.75%
(per troy ounce)
Wheat (-ZW)			$6.2475			$6.2925			-4.29%			-4.29%
(per bushel)
Corn (-ZC)			$6.4350			$6.44			-0.46%			-0.46%
(per bushel)
Cotton			$0.9552			0.9448			4.19%			4.19%
(per pound)
Coffee			$2.2455			2.223			-2.22%			-2.22%
(per pound)
Crude oil (-CL)			$101.56			$101.81			2.76%			2.76%
(per barrel)