Declining Job Losses Steady Wavering Stock Market
Stocks traded in a tight range Wednesday after a private report showed job cuts slowed last month, but not as much as expected.
Major stock market indexes were narrowly mixed in midday trading after the ADP National Employment Report said 169,000 private sector jobs were lost in November, fewer than the 195,000 jobs that were lost in October but worse than the 160,000 cuts expected by economists polled by Thomson Reuters.
The eighth straight decline in job losses at private companies provided the latest evidence that the economy is recovering, but at a slow pace. Investors are keenly focused on the job market, which remains in a funk despite signs of life in manufacturing, housing and other parts of the economy.
“It all falls apart if you don’t get jobs to come around,” said Bill Stone, chief investment strategist at PNC Wealth Management.
The ADP report, while it doesn’t represent the entire economy, is often seen as a good indicator of what will emerge in the government’s closely-watched monthly employment report, which is due on Friday. Economists are expecting the unemployment rate remained flat at 10.2 percent last month.
In other trading, the dollar rose slightly against other major currencies, while Treasurys mostly fell.
Later Wednesday, investors will look to the Federal Reserve’s assessment of regional economic activity for further insight into the strength of the recovery.
Trading has been volatile in recent days as investors try to assess whether the massive gains in the stock market since early March accurately reflect the economy’s strength. Investors have been worried that the nascent recovery could be threatened by economic problems overseas or missteps by the government and the resulting impact on the dollar. Worries over a potential debt crisis in Dubai caused a temporary halt in buying last week.
At midday, the Dow Jones industrial average fell 19.35, or 0.2 percent, to 10,452.23. The Standard & Poor’s 500 index rose 0.14, or 0.01 percent, to 1,109.00, and the Nasdaq composite index rose 10.44, or 0.5 percent, to 2,186.25.
The seesaw trading followed a surge in stocks on Tuesday that was driven by a weaker dollar and higher commodities prices and energy and material stocks. The Dow rose 126 points and traded above the 10,500 level for the first time since last October. A months-long slide in the dollar, the result of rock-bottom interest rates, has encouraged investors to buy riskier assets that have the potential to earn better returns.
Analysts say trading will likely remain choppy through the rest of the year due to opposing forces in the market. Some investors are exiting the market, looking to lock in the gains they’ve amassed since the rally began in March, while others who may have missed out are looking to get in.
Trading in foreign exchange, commodities and debt markets was mixed as traders remained cautious.
“People don’t know where to go,” Stone said. “That wait-and-see attitude has kicked in.”
The ICE Futures US dollar index, which measures the dollar against other major currencies, edged up 0.2 percent. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.30 percent from 3.29 percent late Tuesday.
Gold prices surged to a new high of $1,218.40 an ounce, while oil prices fell $1.83 to $76.54 a barrel on the New York Mercantile Exchange.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 432.5 million shares compared with 469.3 million shares at the same time on Tuesday.
In other trading, the Russell 2000 index of smaller companies rose 6.40, or 1.1 percent, to 595.60.
Overseas, Japan’s Nikkei stock average rose 0.4 percent. Britain’s FTSE 100 gained 0.1 percent, Germany’s DAX index rose 0.04 percent, and France’s CAC-40 added 0.2 percent.
12/2/2009 12:18 PM SARA LEPRO, STEPHEN BERNARD,AP Business Writers NEW YORK