Jobless rate falls, but so do stocks

US unemployment falls to 8.5% in December, suggesting a strengthening economy. But the Dow drops 56, and the S&P falls 3. Tech gains boost the Nasdaq. Gold and oil drop. A report says Apple may put mini-stores in Target.

By Charley Blaine Jan 6, 2012 1:32PM
Charley BlaineUpdated: 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.

Article continues below.
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)










 

79Comments
Jan 6, 2012 3:11PM
avatar

The most highly-paid job is now jury duty.

People in Africa are donating money to Americans.

Motel Six won't leave the light on.

The Mafia is laying off judges.

And finally...

Congress says they are looking into this Bernard Madoff scandal. Oh great... the guy who made $50 billion disappear is being investigated by the people who made $750 billion disappear.

Jan 6, 2012 4:56PM
avatar

WOW  it seems like just yesterday  Pepsi & Beoing closing down some plants,   K-Mart  / Sears closing stores  ,   Lowes closing stores  ,     Glad to see the everthing  is getting better.

LOL      its happy hr Beer mug

Jan 6, 2012 5:19PM
avatar
There will aways be the glass half empty people and glass half full people. Look around where you live and work (if you have a job). Talk to neighbors, family and friends if you really want to know the state of the economy.
Jan 6, 2012 4:31PM
avatar
The books are cooked,Chicago style and everybody is on to it.
Jan 6, 2012 3:59PM
avatar

Lets see now the original November numbers came in at 8.6 but were revised upwards to 8.7 later in December.  We won't get the total numbers for January until early February which will reflect the seasonal lay offs.  Also you have several thousand people who have dropped of the rolls after their 99 weeks of unemplyment insurance ran out. Add to this the fact that fuel prices are creeping up again and will be $4.00 a gallon by spring.  Companies will trim payrolls to keep cost down and those folks will be added to the unemployment numbers.  Right now only 62% of the able bodied workforce is employed, the lowest rate since 1983.  Lets see if these employment numbers are sustainable after February and March.

 

This administration may have created a million government  and union jobs but it destroyed about 5 million private sector jobs in the process.  Right now we have stores in our region shutting doors and relocating due to lack of business.  Even the big guns like WalMart may have had good sales but little profit due to deep discounting.    The unemployment numbers today are like painting a house that has rotten exterior; the paint may look good for a while but eventually the whole thing will fall a part.

Jan 6, 2012 3:50PM
avatar
BTW, the very real pipeline jobs, if only Washington would APPROVE the Canada-to-Texas pipeline rather than contenting itself with very fake jobs reports, would bring paychecks to construction workers in multiple states, such as Montana, South Dakota, Nebraska, Kansas...
Jan 6, 2012 2:58PM
avatar

DOWN to 8.5%?? Am I supposed to be thrilled with that news? With Sears, KMart and several other large companies heading for Chapter 7 ... I'm sure that 8.5% will be 10% in no time. Since Obama has taken office, the US has lost 2 million jobs?? So .... excuse me if I'm not doing back flips. What a stupid article!

Jan 6, 2012 3:08PM
avatar

CEO's are now playing miniature golf.

Jewish women are marrying for love.

Hotwheels and Matchbox stocks are trading higher than GM.

Obama met with small businesses to discuss the Stimulus Package: GE, Pfizer and Citigroup.

McDonalds is selling the 1/4 ouncer.

Parents in Beverly Hills fired their nannies and learned their children's names.

A truckload of Americans got caught sneaking into Mexico.

Jan 6, 2012 3:06PM
avatar

IT IS NOT Job Growth stupid, it is people who are not counted anymore, they don't get unemployment and they don't have JOBS....don't you get it?

 

Q: What was the most positive result of the "Cash for Clunkers" program?

A: It took 95% of the Obama bumper stickers off the road.

Jan 6, 2012 3:50PM
avatar
The reason the unemployment numbers are meaningless is because those were all part time help hired for the holidays and go on the books as employed even though the next count will be minus those workers as they will have all been laid off... I think the government thinks that moving numbers from one column to another should make the market happy? Goodness, perhaps we need new accounting in our government offices
Jan 6, 2012 3:58PM
avatar
Can't wait to hear the speech and chest pounding by Obama.

Then hide in February,March UE numbers grow.


Jan 6, 2012 3:41PM
avatar

AP, January 4, 2012 - 5 Macy's and 4 Bloomingdales stores closing.  830 jobs lost.

AP, December 31, 2011 - Sear's near bankruptcy, massive store closings, Florida hardest hit, job losses in the thousands.

Yes sireee jobs are just busting out all over. (Not.)

(Actually, these jobs reports are meaningless.  Due to accounting gimmickery that began back in the LBJ administration, was continued in Nixon's era, and reached new heights in chicanery during the nonexistent Clinton miracle, just pick a number that suits you on any given day and your number is as good as the report number.)

It is sickening that rather than actually do their work to create business conditions urgently needed to foster job creation of desperately needed manufacturing jobs and construction jobs, US officials are content to do nothing to help the situation and only spend more money America does not have to paper over this problem with worthless job reports.  It is widely known within economics and accounting circles that without the accounting tricks and methodology highjinks the real unemployment rate is running around 21%, not less than that.

In one example of continued stonewalling is the Washington failure to approve the Canada-to-Texas pipeline that would create 16,000 new and immediately available shovel-ready jobs.  This is fact.  Only election year politics is depriving needing and deserving Americans of these jobs.  Even the labor unions (Teamsters and AFL-CIO) are pushing Washington to get off its duff and approve the pipeline and give Americans SIXTEEN THOUSAND desperately needed new construction jobs in America, for Americans.

Time to make that call to tell Washington to APPROVE the Canada-to-Texas pipeline and put Americans BACK TO WORK.

Time to vote out all the incumbents in November. 

Give yourself a job and give America a chance.

Jan 6, 2012 4:45PM
avatar
 I guess many little people and stock traders finally are wise up about the government fake number and the unemployment rate has no meaning to us anymore as it does not reflect truthful about the current state of our economy.   Wise up, open your eyes now. It is all the government fooling you so those congressmen/women could get richer on their campaign donors / lobbying companies to get their ways than protecting the citizens.  Time to Vote All Independence Party to clear out those Republicans and Demoncraticians out of the WH...  ALL of them need to go.  We need a cleansing, clearing house ASAP....
Jan 6, 2012 4:29PM
avatar
Aren't these jobs just seasonal temp jobs?  Who are they trying to kid?  BROTHER.........!
Jan 6, 2012 3:13PM
avatar

I see the pom-poms are out from under the news desk again concerning the jobs report.   They never got around to reporting the number of people who dropped off the unemployment rolls this month. Since they are no longer counted as unemployed after, that the rate magically

keeps dropping as it has been the last 2 years. Job creation has been anemic at best, hardly enough to keep up with population growth. About the only good thing about this economic disaster is that less and less people are buying the kool-aid they are selling.

Jan 6, 2012 6:40PM
avatar

The jobless rate fell for December, big whoop. Let's see what it is for January when all the holiday part time and temp jobs end.

 

Just as a side thought, let's put a 100% tax on those in the House and Senate to help the economy and see how long it takes them after that, to start working. That's a joke, even in a good economy they don't do anything, except take credit for it. 

 

What a wonderful country we use to have. That is before the politicians and their lobbyist friends raided it. I'm not sure what it is or may become now.

avatar
MAY DAY MAY DAY Europe's financial system is burning.

ROFL, 
   What did I tell you Bernnake loaned the ECB $1.2 trillion so they could loan it to European banks so they could buy European government debt. And what did the European banks do with the money they stole it. Now having been caught short the ECB has broken it's own laws and brought European government debt while printing new monies to do it. Seems like Geithner (the tax evader who should be in jail not running the IRS) has taught the Europeans well in how to break the laws. 

ECB Steps in as Italian Yields Hit 7%
BY NICK CAWLEY

LONDON—The European Central Bank again stepped into government bond markets to buy debt issued by the Italian and Spanish governments, whose borrowing costs spiralled higher Friday on concerns over the euro-zone financial system.

The yield on 10-year Italian government bonds moved up to 7.12% as investors sought higher risk premiums, returning Italian borrowing costs to levels deemed unsustainable over the longer term. At that level, the Italian government must pay 5.24 percentage points more than German yields at that maturity.

   
Jan 6, 2012 4:14PM
avatar

Wagon master, you prefer census worker jobs that lasted for mere MONTHS and very limited Christmas retail jobs that lasted mere WEEKS (and those part-time for the most part) to full-time construction jobs that will last, in your post's stated time frame, four or five YEARS? 

 

(That is certainly your right.  I doubt that those looking for real, full-time and better-paid employment would agree with you, but OK. If you prefer pieces-of-jobs at minimum wage with 20 employers over 4-5 years to one solid, full-time and better-paid job with one employer, have at it.  Most would prefer the latter.)

 

 

Jan 6, 2012 6:59PM
avatar
U3 is not an accurate indicator of employment. People who have given up are not counted. Unemployment is a function of money supply. When the money supply deflates, people cannot possibly be employed at levels that allow them to earn the monetary bubble level incomes. Google for unemployment kondratieff wave to see another way to look at unemployment: Count who is actually employed.


Jan 6, 2012 5:44PM
avatar
Only people left in the stock market for the most part are the criminals ....

There's a healthy environment.



PS If you really want to invest in growth enterprises in this country you should look at investing in the Mexican Drug Cartels. They operate alot like Wall Street with the bonus if you catch your finance manager swindling you , you get to shoot him in the face and find another.


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