Despite rally's fade, Dow finishes at nearly 5-year high

Stocks rally but retreat after the government says the unemployment rate falls to 7.8%, lowest since 2009. Apple, Zynga and Facebook lead a pullback. Crude oil falls below $90. Alcoa starts earnings season on Tuesday.

By Charley Blaine Oct 5, 2012 12:37PM
Charley BlaineUpdated: 7:35 p.m. ET

Stocks gave up most of a rally today, but buying very late in the session pushed the Dow Jones industrials ($INDU) to their best close in nearly five years.

The initial buying was set off when the Labor Department said the U.S. unemployment rate had dropped to 7.8% in September, its lowest level since 2009. September payrolls grew by 114,000, the department said, a touch below the consensus estimate of 120,000 jobs. But estimates for payroll growth in July and August grew by 86,000, suggesting that the summer slowdown wasn't as bad as thought.

The news of the falling unemployment rate cheered the White House, reeling from President Obama's performance in Wednesday's debate against Mitt Romney. It dismayed Republicans. "This is not what a real recovery looks like," Romney said in a statement. Former General Electric (GE) CEO Jack Welch went so far as to accuse the Labor Department of cooking the numbers. Labor Secretary Hilda Solis said she was "insulted" by the idea.

The rally faded on its own, however. The pullback began when big technology stocks, such as Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Zynga (ZNGA), stumbled and accelerated on declines in energy and financial stocks.

The Dow closed up 35 points to 13,610, its best close since Dec. 10, 2007. The blue chips had been up as many as 87 points in the morning. The Standard & Poor's 500 Index ($INX) was off slightly to 1,461. The Nasdaq Composite Index ($COMPX) slipped 13 points to 3,136.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 17 points to 2,812. The index was pressured by Apple, down $14.21 to $652.59, largely because of strong quarterly results of Samsung, whose smart phones are taking share from the iPhone. The stock is down 7.3% since hitting an intraday high of $705.07 on Sept. 21.

Stocks did finish higher after two weeks of declines. The Dow finished up 1.3%, the S&P 500 up 1.8%, and the Nasdaq up 1.2%. For the year, the Dow is up 11.4%, with the S&P 500 up 16.2% and the Nasdaq up 20.4%.

Today was the first anniversary of co-founder Steve Jobs' death.

Next week is light on economic reports, but the third-quarter earnings season starts after Tuesday's close when Dow component Alcoa (AA) reports its results. Costco Wholesale (COST) reports on Wednesday, and JPMorgan Chase (JPM) and Wells Fargo (WFC) report on Oct. 12.

Markets for the week



10/5/2012

9/28/2012

% chg.

YTD chg.
Dow Industrials

13,610.15

13,437.13

1.29%

11.40%
S&P 500

1,460.93

1,440.67

1.41%

16.17%
Nasdaq 

3,136.19

3,116.23

0.64%

20.38%
Russell 2000

843.18

837.45

0.68%

13.80%
Crude oil 

$89.88

$92.19

-2.51%

-9.06%
(per barrel)

0.00

0.00

0.00%

0.00%
U.S. Dollar Index 

79.43

80.03

-0.75%

-1.36%
10-yr. Treasury

1.73%

1.64%

5.80%

-7.43%
Gold

$1,780.80

1,773.90

0.39%

13.66%

Why the rally faded
Until today, the Dow had not been able to close above 13,600 despite repeated assaults over the past month. The S&P 500 peaked at 1,466 on Sept. 14 and appears to have stalled out.

Why the market struggled today may be that computerized sell programs were set to generate sell orders at those levels.

It also may be that many investors are worried that the government won't be able to stop the triggering of the so-called fiscal cliff. That's a provision agreed to last year that lets the Bush-era tax cuts expire along with large, automatic spending cuts. That would probably set off a quick decline in U.S. economic growth.

There were those very hotly debated charges of employment report manipulation that exhausted many traders, and, lastly, Europe's debt crisis continues.
Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$89.88

$91.71

-2.51%

-9.06%
(per barrel)











Heating oil (-HO)

$3.1559

$3.1884

-0.10%

8.29%
(per gallon)











Natural gas (-NG)

$3.3960

$3.4060

2.29%

13.62%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.9525

$2.9429

1.11%

11.10%
(per gallon)











Brent crude 

$112.02

$112.58

-0.33%

4.32%
(per barrel)











Retail gasoline

$3.7890

$3.7840

0.05%

15.66%
(per gallon; AAA)












Crude oil, gold fall
Crude oil
(-CL) in New York settled down $1.83 to $89.88 a barrel, and Brent crude was down 85 cents to $111.73 a barrel.

Gold
(-GC) settled down $15.70 to $1,780.80 an ounce. For the week, gold was up 0.4%; it's up 13.7% for the year.

Silver
(-SI) was off 52.9 cents to $34.572 an ounce. It's flat on the week and is up 23.9% for the year. Copper (-HG) was off slightly to $3.778 a pound. It was up slightly for the week and up 10% for the year.

The 10-year Treasury yield rose to 1.732% from Thursday's 1.665%.

A pretty good jobs report
The unemployment rate is derived from a telephone survey of about 50,000 households (often called the "household survey").

Most economists had expected the rate to rise to 8.2%. It fell because the number of workers estimated to be working rose by 873,000, the biggest gain since June 1983. The number of unemployed fell by 456,000.

The number is famously volatile, in part because it includes people who are self-employed. It is not clear how it will be revised in the next two months. The report -- like many government reports -- is revised twice after its initial release to reflect the inclusion of more data.

Still, the household survey suggests that unemployment fell among just about all groups the Labor Department tracks. The alternative unemployment measure, which amalgamates those unemployed with those not looking for work or taking part-time work, was unchanged from August at 14.7% but was down from 15% in July and 16.4% a year ago.

The payroll gains weren't nearly so gaudy and probably reflect the economy more clearly. Private-sector employment grew by 104,000. But that gain reflects the upward revisions in July and August.

The biggest gains came in the education component of state government. There were also gains in health care, transportation and professional and business services.

Manufacturing declined, including automobile manufacturing. Construction employment grew by 5,000.

Residential construction employment at 564,800 was up 1,100 as evidence builds of a small but real housing recovery. But that's still down 457,200 from the peak of the housing boom in April 2006.

Two other areas cheered economists: The average workweek increased to 34.5 hours from 34.4 hours last month, and the average hourly earnings rose 7 cents to $23.58.

Big tech is the market's weak link
Apple isn't alone in being pressured. Amazon.com, Microsoft (MSFT), Oracle (ORCL) and Netflix (NFLX) were lower.  (Microsoft is the publisher of MSN Money.)

So were Green Mountain Coffee Roasters (GMCR), Marriott International (MAR) and First Solar (FSLR). First Solar, down $2.48 to $20.07, was downgraded to "sell" because of equipment problems. Avian Securities cited loose core plates on the backs of the panels that could cause fires or possible electric shock.

Green Mountain fell $1.50 to $22.13 because of reports of new competition for its Keurig single-cup coffee maker.

The most spectacular loss -- by percentage terms perhaps -- was game developer Zynga, down 34 cents to $2.48 after warning that third-quarter results were going to be weak and prospects going forward are problematic.

Zynga is one of the biggest drivers of revenue to Facebook, whose shares were down $10.4 to $20.91.

Home Depot leads the Dow
Twenty-one of the 30 Dow stocks were higher, led by Home Depot (HD) and Boeing (BA). UnitedHealth (UNH) and Bank of America (BAC) were the laggards. Bank of America was the Dow's top performer for the week; UnitedHealth was fourth. The two are also the best-performing Dow stocks of 2012, up 67.3% and 52.9%, respectively.

Meanwhile, 269 S&P 500 stocks were ahead, with Avon Products (AVP) the leader. Andrea Jung, the chairman and former CEO will stop down but remain an advisor to the board.

First Solar and Chipotle Mexican Grill were the laggards. The latter fell after hedge-fund manager David Einhorn thought it was vulnerable because of its high valuation.

Only 39 Nasdaq-100 stocks had gains, led by Monster Beverage (MNST) and Dollar Tree (DLTR). Green Mountain and Citrix Systems (CTXS) were the laggards.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.100%

0.100%

11.11%

900.00%
5-year Treasury note 

0.667%

0.623%

5.87%

-19.64%
10-year Treasury note

1.732%

1.665%

5.80%

-7.43%
30-year Treasury bond

3.032%

3.032%

0.00%

4.95%
Currencies











U.S. Dollar Index

79.428

79.440

-0.75%

-1.36%
British pound

1.6142

1.6200

-0.11%

3.89%
(in U.S. $)

 








U.S. $ in pounds

£0.620

£0.617

0.11%

-3.74%
Euro in dollars

$1.30

$1.30

1.39%

0.59%
(in U.S. $)

 








U.S. $ in euros

€ 0.767

€ 0.768

-1.38%

-0.58%
U.S. $ in yen 

78.80

78.49

1.07%

2.21%
U.S. $ in Chinese

6.35

6.32

1.03%

0.31%
yuan











Canada dollar

$1.022

$1.020

0.54%

4.19%
(in U.S. $)

 








U.S. dollar 

$0.979

$0.980

-0.46%

-4.02%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,780.80

$1,796.50

0.39%

13.66%
(per troy ounce)

 








Copper (-HG)

$3.778

$3.786

0.53%

9.95%
(per pound)

 








Silver (-SI)

$34.5720

$35.1010

-0.01%

23.85%
(per troy ounce)

 








Wheat (-ZW)

$8.5750

$8.6925

-4.99%

31.37%
(per bushel)

 








Corn (-ZC)

$7.4800

$7.570

-1.09%

15.70%
(per bushel)

 








Cotton 

$0.7149


0.7209

-1.19%

-22.02%
(per pound)

 








Coffee

$1.6810

1.7505

-3.11%

-26.80%
(per pound)

 








Crude oil (-CL)

$89.88

$91.71

-2.51%

-9.06%
(per barrel)










 

389Comments
Oct 5, 2012 1:02PM
Oct 5, 2012 3:10PM
avatar

Did he half the deficit?

 

The answer is of course no.......... Are the jobs being created providing a decent living for citizens? The answer is of course no........ Have people given up on finding a good job? Yes

Has the food stamp program grown like a cancer? yes

 

Just keep drinking your koolaid and believing in your fairy tales libs.

Oct 5, 2012 12:52PM
avatar
Crude oil should be at 1/2 the price.  There is oversupply, less is being used, and still the price at the pump is high.  Obama, investigate!!
Oct 5, 2012 3:15PM
avatar
The jobless rate is falling because those that leave the work force and stop looking are not counted. This is more horse dropping news, and it will not fool anyone, except the for the stupid.
Oct 5, 2012 1:14PM
avatar

Just more BS to try to pull in the suckers before election day.  They did the same thing when Bush was in office.

 

The problem with this is, they actually think this gives people a psychological boost when in actuallity, it does just the opposite and causes people to tighten their belts because they are fully aware that they are being pumped with phony information and it's just the Federal Reserve in their pumping up the phony stocks.

avatar

A FREAKING ESTIMATE!!!!!!!!!!!!!!!!!!!

 

The unemployment rate is derived from a telephone survey of about 50,000 households (often called the "household survey").
Most economists had expected the rate to rise to 8.2%. It fell because the number of workers estimated to be working rose by 873,000....

 

HOW IN THE WORLD DOE THEY COME UP WITH AN ESTIMATED INCREASE OF 873,000 NEWLY EMPLOYED BY CALLING 50,000 HOMES?????????!!!!!!!!!

Oct 5, 2012 3:19PM
avatar
Anyone who truly believes the unemployment rate is really 7.8 % is a total LOSER !
Oct 5, 2012 3:22PM
avatar
Man, lib's are mean hateful little things aren't they!
Oct 5, 2012 3:36PM
avatar

I don't care what side of the fence upon which one may reside. Every single one of us should DEMAND the government report real numbers!

 

 

Oct 5, 2012 2:37PM
avatar
I don't have respect for false employment numbers/those involved, at such a convenient time before this election, and especially after Romney did such a  great job  in the Debate. I also don't have respect for someone who can't look his debate opponent eye to eye............When Obama isn't doing his dance, coddled  among his fans........well.......he just doesn't stand alone very well........Go Romney!!!
Oct 5, 2012 1:09PM
avatar
The numbers don't jive at all.  True you do have a large number of temp jobs from seasonal hiring, but you also have a large number of folks who fell of the rolls in September after exhausting their 99 weeks of state and Federal unemployment benefits.  The average work week rose .10%, but there is till no 40 hr work weeks.  Many retailers had cut back severely this past year and that would explain the reason for the rise in hiring.  Also, how do you get these projections based on 50,000 households? That is avery small percent to the real total of unemployed.  Remember too that these are projections, the real numbers are always adjusted up on claims and adjusted down on jobs after the middle of the month when all the official reporting data is in.  You never hear much fanfare about the actual numbers and even MSNBC was questioning the validity and timing of the numbers.  
Oct 5, 2012 1:15PM
avatar
I said last month we would get the number under 8, just before the election.

The number will drop again as XMAS jobs will be added over the next month or 2.

U6 number unchanged?
.1% drop in participation.
.3% drop in the reported number???
Oct 5, 2012 3:51PM
avatar

Today's headlines are a joke.  Liberal media at its best.  Coincidentally, less than a month before election and all of a sudden we go from 8.3% unemployment to 7.8%.  They somehow readjusted July and August numbers to reflect more jobs added.  Any job added within the last 30 days are going to be seasonal workers that will be laid off at the 1st of the year.  When the majority of the country is ignorant, the govt can do whatever they want.

Oct 5, 2012 2:52PM
avatar
TWIT says -
Dhl2448,
I'm sure President Obama never expected that the first two days after he was elected the GOP had meetings to develop a plan to make him a ONE TERM PRESIDENT.......Putting Party over Country...
Do some homework man....
 
Not that I agree to this but how does this make him a viable leader to pull the nation out of the economic mess we are in now? The most important part of leadership is finding out how to get the right people to follow. He failed........ How will he not fail in the next 4 years?????
Oct 5, 2012 3:51PM
avatar

So the unemployment rate conveniently drops below 8%, even though the actual number of jobs added in September was a pathetic 114,000, with a larger than normal chunk of those being government jobs.

 

I smell BS. 

 

Keep in mind, the man running for re-election will do ANYTHING to keep his job.  That includes spending tax payer money to manipulate companies, such as defense contractors, into breaking federal law by not providing notice of pending mass layoffs if the fiscal cliff is not prevented.

 

Oct 5, 2012 3:15PM
avatar

Seems like all this stock market and pollster stuff lasts for about 12 hrs. then reallity sets in again.  That proves it's all false and bogus b.s.

The only thing that gonna change things is a change in the whitehouse.

Oct 5, 2012 2:55PM
avatar
It's called manipulating the numbers for election time.
Oct 5, 2012 3:16PM
avatar
Do not be surprised about today's drop so far.....Nobody down here bought the bogus unemployment numbers this morning, purely political, Obummers socialist regime at work....Wall Street doesn't get fooled that easy...Unfortunately we are sure plenty of people fell for the big sucker's rally we've had most of the day.....Oh we'll, still 45 minutes to go....More after the close.
Oct 5, 2012 2:35PM
avatar
Maybe the person who was compiling the job numbers had just flown into Denver a couple hours before running the numbers.
Oct 5, 2012 2:13PM
avatar
Yep, less people employed right now than last time we were at 7.8%.
I love math - don't you.
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[BRIEFING.COM] The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.

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