NEW YORK: Stocks fell on Friday, and the dollar slumped to another record low against the euro, as hopes for sustained US economic growth were dashed by downbeat US jobs data and an Intel Corp forecast.
Bond yields posted their largest one-day drop since Sept 11, 2001, as the sluggish data suggested the Federal Reserve has plenty of room to keep interest rates at 45-year lows.
Gold prices approached eight-year highs as a weaker dollar made bullion cheaper for overseas investors.
Stock volume tapered off as many people left work early during a big East Coast snowstorm that blanketed New York City with snow by late afternoon. The storm is expected to dump as much as 53cm of snow in parts of New England by Sunday.
“We’re digesting the jobs news and the Intel outlook last night,” said Owen Fitzpatrick, a managing director at Deutsche Bank Private Wealth Management. “We're seeing a sell-off in tech, but I don't think it's going to last, given the fact we're still ramping up momentum on the positive side.”
In the jobs report, the government said US companies hired far fewer workers than expected in November, though jobs were created for the fourth straight month and the unemployment rate fell.
Intel dragged on the technology sector, after the No. 1 semiconductor maker failed to raise the top of its quarterly sales forecast and disclosed a $600mil charge for a poorly performing wireless business late Thursday.
The report dashed investors’ hopes for an outlook that would show the economy’s accelerating recovery is finally feeding into corporate America’s profits.
The Dow Jones industrial average ended down 68.14 points, or 0.69%, at 9,862.68, according to the latest available data. The Standard & Poor’s 500 Index ended off 8.22 points, or 0.77%, at 1,061.50. The technology-laden Nasdaq Composite Index dropped 30.98 points, or 1.57%, to 1,937.82.
The major indexes ended the week on a mixed note. The blue-chip Dow rose 0.82%, while the S&P 500 gained 0.31%. But the Nasdaq fell 1.14%.
In bond trading, two-year Treasury yields registered their steepest one-day drop since just after the Sept 11, 2001, attacks, after the weak jobs report suggested the Federal Reserve would hold interest rates steady at 45-year lows for some time.
Intel was among the Nasdaq’s most actively traded stocks. It fell US$1.44, or 4.29%, to US$32.10, and was the blue-chip Dow’s biggest percentage loser. Other chip shares followed suit, sending the Philadelphia Stock Exchange’s Semiconductor Index down 3.19%.
Kmart Holdings Corp shares tumbled, after it reported a narrower quarterly loss from a year earlier when it was in bankruptcy, but its sales slumped as it cut fewer prices in hopes of turning a profit.
Shares of Kmart, the No. 3 US discount chain, which filed the largest-ever retail bankruptcy in January 2002, fell US$1.90 or 6% to US$29.40.
The Labor Department said the number of workers on US payrolls outside the farm sector edged up by 57,000 in November – far below forecasts for a huge increase of 150,000 and sharply lower than October’s upwardly revised gain of 137,000 jobs.
However, the unemployment rate dipped in November to 5.9%, its lowest level since March, from 6.0% in October.
News that the US economy had created a mere 57,000 jobs in November sparked a big shift in the two-year US Treasury note’s yield, which sank as low as 1.84% in the session from 2.04% late Thursday.
The two-year note’s price, which moves in the opposite direction of its yield, was up 11/32 at 100 late Friday afternoon, with its yield dropping to 1.87% from 2.04% late on Thursday.
The benchmark 10-year note rose 1-2/32 in price to 100-4/32, pushing its yield down to 4.23% from 4.37% on Thursday, after swooping as low as 4.18%.
The 30-year bond soared 1-16/32 to 104-17/32, driving its yield down to 5.07% from 5.16%.
The euro rose to US$1.2177, a record high for the sixth day in a row. It settled at US$1.2163, up from US$1.2081 late Thursday.
The dollar hit a new two-week low of 107.56 yen, within a whisker of a three-year low of 107.51 yen set in November. It ended the day at 107.66 yen, below 108.21 yen on Thursday. – Reuters