U.S. stock indexes finished modestly lower Friday in a choppy session rocked by disappointing economic data and short-covering activity. News that September nonfarm payrolls fell 263,000, unemployment rose to 9.8%, and August factory orders fell 0.8% generated downward pressure on the market for much of the day.
On Friday, the 30-stock Dow Jones industrial average finished lower by 21.61 points, or 0.23%, at 9,487.67. The broad Standard & Poor's 500-stock index fell 4.64 points, or 0.45%, to 1,025.21. The tech-heavy Nasdaq composite index fell 9.37% points, or 0.46%, to 2,048.11.
On the New York Stock Exchange, 20 stocks were lower in price for every 10 that advanced. Breadth on the Nasdaq was 16-9 negative.
Treasuries, which surged Thursday as stocks tumbled, finished lower Friday.
The dollar index was lower. Gold futures were higher after a dip below $1,000 per ounce. Oil futures were off.
September nonfarm payrolls fell by a far more than expected 263,000, vs. an downwardly revised 201,000 drop in August, and the unemployment rate rose to 9.8% from 9.7% in August. Average hourly earnings rose 0.1%.
"As with the ISM and Chicago PMI declines reported earlier in the week, the jobs data have raised questions about the breadth and sustainability of the auto-led third-quarter bounce in sales and output," says Action Economics.
For this week, the attention will be on FridayÂs update on exports and imports. The July trade deficit widened much more than analysts had expected, suggesting foreign trade might subtract about 0.5 percentage points from third-quarter growth. If the August gap widens further, the drag on growth would be even larger.
Right now, economists surveyed by Action Economics expect both exports and imports to increase slightly, resulting in an August deficit close to the $32-billion gap recorded in July.
Next week's other key reports include the ISM nonmanufacturing index for September and weekly initial jobless claims.
Also hurting sentiment Friday: News that August factory orders fell 0.8% after rising 1.3% in July.
Meanwhile, the International Monetary Fund said a double-dip recession is possible.
Policy makers are likely to continue backing a weak dollar until the economy shows substantial improvement, Pimco's Bill Gross told CNBC. Worse-than-expected unemployment data reinforced that the country is still struggling to escape the worst downturn since the Great Depression, said Gross, co-CIO of Pimco, which runs the world's largest bond fund. The Fed is likely to keep interest rates low which in turn weakens the dollar -- but don't expect any government officials to officially endorse a low currency.
"The strong dollar is always the policy so to speak," Gross said during an interview. "One of the ways as a country to get out from under a debt burden is to devalue."
News that Wal-Mart's (WMT) chairman predicted a slow economic recovery and challenging business conditions also weighed on equities.
Shares of Apple (AAPL) headed higher Friday on an upgrade of the stock by UBS Financial.
IBM (IBM) shares also moved higher, bucking the market downtrend.
General Electric (GE) said it was considering an IPO for its NBC Universal unit after overatures from Comcast (CMCSK).
Lender CIT Group (CIT) began a debt exchange in a last-ditch effort to stave off bankruptcy, boosting its shares.
First Solar (FSLR) surged after it replaced Wyeth in the S&P 500.
Shares of Echo Global Logistics (ECHO) begin trading Friday after the freight and cargo company raised $80 million in a share offering.
Reuters reported Friday that Federal Reserve officials said that while the recession-battered economy is on the mend, it will be weak for a while and the Fed is likely to keep its extensive support policies in place for a while. The presidents of the Cleveland and the Atlanta Federal Reserve banks, in separate remarks, highlighted the economy's continued reliance on government stimulus programs in citing its fragile state.
Cleveland Fed President Sandra Pianalto said she expects a gradual and bumpy recovery from the recession and is not worried that the Fed's extensive efforts to pump money into the economy risk igniting inflation. "I believe there is enough slack in the economy to keep inflation subdued for some time. In this environment, I believe that maintaining the current accommodative policy stance helps to foster both the continued recovery of our weakened economy and the stabilization of inflation rates at levels consistent with price stability," she told a conference sponsored by Market News International.
Both Pianalto and Dennis Lockhart, president of the Atlanta Fed, said they expected already-high unemployment rates to continue to climb.
In economic news Friday, U.S. factory orders slipped 0.8% in August from a revised 1.4% rise in July (from 1.3%). Durable goods orders were revised from the -2.4% in the advance report to -2.6% currently. Excluding transportation, orders edged up 0.4% after a 0.6% decline previously (revised from -0.7%). Nondefense capital goods orders excluding aircraft fell 0.9% after a 1.3% decline in July (revised from -0.3%). Shipments dropped 0.3% in August, with the nondefense capital goods excluding aircraft component falling 2.0%. Inventories fell another 0.8%. The inventory-shipment ratio was 1.38 from 1.39 (revised from 1.40).
U.S. nonfarm payrolls fell 263,000 in September from a revised 201,000 decline in August (was -216,000) and a 304,000 drop in July (was -276,000), for a net -13,000 revision. That's a 21st straight month of decline. The unemployment rate ticked higher to 9.8% from 9.7%. The workweek dipped to 33.0 from 33.1. Average hourly earnings rose 0.1% after a 0.4% gain in August (revised from 0.3%).
Among other companies in the news Friday, Accenture (ACN) posted fourth-quarter earnings per share (EPS) of $0.63 (excluding a $0.24 restructuring charge), vs. $0.67 EPS one year earlier, on a 14% revenue decline. Wall Street was looking for $0.63. The company declared a $0.75 annual cash dividend, an increase of 50%. Accenture also said its board approved moving from an annual to semi-annual schedule for dividend payment starting in the third quarter of fiscal 2010.
Immucor (BLUD) posted first-quarter EPS of $0.30, vs. $0.28 EPS one year earlier, on a 14% revenue rise.
Standard Microsystems (SMSC) posted second-quarter non-GAAP EPS of $0.08, vs. EPS of $0.46 one year earlier, on a 23% revenue decline. The company expects a 9%-15% sequential increase in third-quarter revenue. Wall Street was looking for breakeven EPS.
Global Payments (GPN) reported first quarter EPS of $0.71, vs. EPS of $0.71 one year earlier, despite a 9% revenue rise. The company noted unfavorable foreign currency trends. Wall Street was looking for EPS of $0.65.
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