WRAPUP 3-U.S. stocks, dollar dip despite robust job report
Reuters, 11.07.03, 6:28 PM ET
By David Gregorio
NEW YORK (Reuters) - U.S. stocks and the dollar fell Friday despite a surprising report that the unemployment rate dropped as the economy in October created more than double the number of jobs economists had expected.
Treasury prices slipped, but losses were modest considering the robust jobs report.
Oil prices jumped as the upbeat data signaled a boost in demand. Gold prices also rose.
The number of workers on U.S. payrolls outside the farm sector soared by 126,000 in October, the largest rise since January, far exceeding forecasts for a 58,000 gain. The unemployment rate fell to 6.0 percent, the lowest since April, from 6.1 percent in September, also surprising economists.
The Labor Department also made substantial upward revisions to payrolls for August and September, a sign that the third quarter's sizzling economic growth had translated into more jobs.
GOOD NEWS PRICED IN
Stock prices surged after the reports, but gave back those gains and closed lower. Analysts said some investors worried that Wall Street's rally since March may have already priced in the improvement in the job market.
"It was a fairly muted response to the jobs number ... there was anticipation that the number was going to be good anyway," said John O'Donoghue, managing director of listed trading at Credit Suisse First Boston. "Everybody thought we'd be off to the races, but in essence, we've priced in a lot of the expectations already."
The blue-chip Dow Jones industrial average fell 47.18 points, or 0.48 percent, to 9,809.79. The broad Standard & Poor's 500 Index dipped 4.84 points, or 0.46 percent, to 1,053.21. Early in the session, both market gauges hit their highest levels since June 3, 2002.
The technology-heavy Nasdaq Composite Index slipped 5.63 points, or 0.28 percent, to 1,970.74. Earlier, it hit a high of 1,992.27, a level not seen since Jan. 15, 2002.
For the week, the Nasdaq rose 1.99 percent, while the Dow edged up 0.09 percent and the S&P 500 inched up 0.24 percent.
Nvidia Corp. surged $3.58, or 19.7 percent, to $21.75. The graphics chip designer Thursday, posted a quarterly profit versus a year-earlier loss as revenue surged a surprising 13 percent. The company said current-quarter sales would beat Wall Street estimates.
Altria Group Inc. jumped $2.21, or 4.7 percent, to $49.51 and ranked as the Dow's biggest percentage gainer. Merrill Lynch said it added the tobacco company to its "focus list" of recommended stocks.
DOLLAR DROPS DESPITE DATA
The dollar also surged immediately after the payrolls report, then retreated and closed lower.
"Day traders saw the good numbers, embraced the dollar and got overextended. But the rally ran out of steam and they had to turn tail and cover their positions," said John Hazelton, director of foreign exchange at PNC Bank in Pittsburgh.
After the payrolls data, the euro fell to a six week low of $1.1377, then rose to $1.1521, up from $1.1412 late Thursday.
Against Japan's currency, the dollar rose as high as 110.40 yen, then dropped to a session low 109.05 yen. Its late level was 109.40 yen, down from 110.24 Thursday.
U.S. Treasury prices plunged after the payrolls report, but then regained some ground, making losses modest at the end of the day. Analysts said many investors were short of Treasuries, having sold bonds they did not have in anticipation of just such a fall in prices. Some took profits by buying the bonds back, limiting the market's overall drop.
The 10-year note slid 9/32 to 98-14/32, driving its yield up to 4.45 percent from 4.41 percent late Thursday. At one point, they hit a nine-week peak of 4.49 percent.
The price of the 30-year bond shed 9/32 to 101-18/32, pushing its yield up to 5.27 percent from 5.25 percent. The two-year note fell 3/32 to 99-08/32, bringing its yield up to 2.02 percent from 1.98 percent.
OIL, GOLD UP
Oil prices jumped as the jobs report gave hope for increasing demand in the world's biggest energy consumer. The U.S. Energy Information Administration (EIA) said demand for gasoline rose in late October, and forecasts for colder weather in the Northeast looked set to boost heating oil demand.
U.S December crude futures settled 59 cents higher at $30.85 a barrel.
Gold fell at the open as the dollar surged on the jobs figures. But December gold ended up $2.70 at $383.40 an ounce. Estimated volume was a brisk 59,000 contracts.
Market players said safe-haven demand supported gold prices amid rumors that the U.S. terror alert level had been raised. The Department of Homeland Security squashed the rumor, telling Reuters the alert status remained at "yellow."
In London, the FTSE 100 index rose 52.7 points or 1.2 percent to close at 4,376.9, helped by the U.S. jobs data. In Tokyo, the benchmark Nikkei average closed up 0.73 percent at 10,628.98, recovering from Thursday's 2.63 percent drop. (Reporting by Rachel Cohen, Pedro Nicolaci da Costa, Daniel Bases, Gene Ramos and Alden Bentley)
Copyright 2003, Reuters News Service
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