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November 4, 2005
Lackluster employment data left stocks in negative territory Friday as Wall Street mulled the economy's health amid heightened concerns about growth and inflation.
The Labor Department said the nation's employers added 56,000 jobs in October, half the projected 100,000 increase and signaling to investors that the economy is slowly recovering from the blows delivered by hurricanes Katrina and Rita.
Wall Street also focused on September's job loss, which was scaled back to just 8,000 from a previous 35,000 decrease. That news suggested the hurricanes' impact was less than feared, although the department said their effect is still unclear.
Christopher Piros, director of investment strategy for Prudential's Strategic Investment Research Group, said a downward revision to August's figure indicated the job market was weaker than previously thought before the hurricanes struck. He also noted that while payrolls have expanded by 48,000 from August to October, the growth came from a 52,000 rise in temporary employment and a 45,000 gain in construction jobs.
"Meanwhile, the rest of the economy has lost 49,000 jobs," Piros said. "That's not exactly a picture of strength."
In midday trading, the Dow Jones industrial average fell 26.57, or 0.25 percent, to 10,496.02.
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 3.70, or 0.3 percent, at 1,216.24, and the Nasdaq composite index slipped 0.86, or 0.04 percent, to 2,159.36.
Bonds were flat after falling to eight-month lows a day earlier, with the yield on the 10-year Treasury note unchanged at 4.65 percent from late Thursday. The dollar was mostly lower against most major currencies, while gold prices tumbled.
Inflation concerns swelled when the Labor Department also reported average hourly earnings grew 0.5 percent last month, ahead of estimates for a 0.2 percent gain. Higher wages benefit workers but could lead to increased prices as costs rise.
Cooling oil prices gave some relief to the market after expectations for greater demand this winter drove up prices more than $2 a barrel on Thursday. A barrel of light crude dropped 78 cents to $61 on the New York Mercantile Exchange.
Software maker Oracle Corp. said late Thursday that co-President and Chief Financial Officer Greg Maffei is leaving next week after just four months on the job, sparking concerns about the company's hiring practices. Oracle nonethless added 33 cents to $12.53.
Shares of Apple Computer Inc. dipped after Prudential Equity lowered the stock one notch to "neutral," saying a recent runup reflects expectations for strong first quarter and fiscal 2006 results. Apple lost $1.18 to $60.67.
Investors pulled back from Merck & Co. a day after news of the drugmaker's victory in the latest trial over its Vioxx painkiller lifted shares almost 4 percent. The company still plans to fight the 7,000 cases that have been filed. Merck fell 29 cents to $29.19.
In earnings news, newspaper publisher Washington Post Co. reported a 19 percent drop in quarterly profit, hurt by hurricane-related costs and lower revenue in its television and magazine divisions. Washington Post slumped $10 to $760.
Expedia Inc. surged $1.99 to $22.70 after the online travel agent said Thursday its earnings climbed 41 percent to soundly beat Wall Street targets, helped by stronger revenue and bookings.
Declining issues overtook advancers by more than 9 to 5 on the New York Stock Exchange, where volume of 661.4 million shares lagged the 877.5 million shares traded at the same point Thursday.
The Russell 2000 index of smaller companies fell 3.83, or 0.58 percent, to 654.94.
Overseas, Japan's Nikkei stock average jumped 1.3 percent. Britain's FTSE 100 fell 0.15 percent, Germany's DAX index lost 0.31 percent, and France's CAC-40 was lower by 0.07 percent.
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