U.S. stocks were trading lower on Friday as a worse-than-expected jobs report confirmed fears that the U.S. economy is in a recession. The latest data completes three consecutive months of job losses and adds to economic concerns stirred by a minimal rise in non-manufacturing activity in March.
The Dow Jones Industrial Average shed 51.30 points, or 0.41%, to trade at 12,574.73. The S&P 500 index edged down 1.65 points, or 0.12%, to 1,367.66. The Nasdaq composite index fell 1.91 points, or 0.08%, at 2,361.39.
On the New York Stock Exchange and the Nasdaq, the ratio of stocks climbing to those falling was flat amid active trading.
The number the markets had been anxiously awaiting all week sealed a sense of gloom about the economic outlook on Wall Street. Nonfarm payrolls dropped 80,000 in March -- more than the 50,000 decline that was expected -- while the unemployment rate rose to 5.1% from 4.8% in February. This was the largest jobs decline since March 2003 and the highest unemployment rate since September 2005.
Compounding the bad news were downward revisions in the payroll figures for January and February, which totaled 67,000 for the two months. All together, the U.S. economy lost 232,000 jobs in the first quarter of 2008.
John Ryding, Bear Stearns' chief U.S. economist declared in an email report that the labor market was sending "clear and unmistakable recession signals." A rise in the unemployment rate of as much as 0.7% from its low a year ago "has never occurred in the post-war period without the economy being in recession," he said. He also cited the decline in private payrolls for four consecutive months as further evidence of a recession.
Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Thursday night that the economy has "all but stalled and could contract."
Oil futures got a boost from low refinery rates in the past week and unexpected production shutdowns. The climb in prices is surprising, however, in light of the weak jobs report, as expectations of weakening demand for oil has typically weighed on prices, Action Economics said.
On NYMEX, May crude futures were trading $1.79 higher at $105.62 per barrel, driven mainly by fund buying. A big decline in U.S. gasoline supplies last week may be one reason for the gains, CNBC Business News said. With the weekend approaching, however, the area around $106 could be a top given the potential for profit-taking related selling through the afternoon session, Action Economics said.
Among the other stocks in the news on Friday, Massey Energy (MEE) shares rose 13.8% on news that its board approved an additional $90 million in capital spending for 2008 to accelerate expansion projects. The company projected average produced coal revenue of $55.50 to $56.00 per ton in the first quarter and expects its average operating cash cost to be $45.00 to $46.00 per ton.
Shares of the Mosaic Company (MOS) gained 9.1% after the company reported third-quarter earnings of $1.17 per share, vs. 10 cents a year ago, on a 68% jump in revenue. The fertilizer and animal feed producer said the environment for its core phosphate and potash businesses looks extraordinary despite recent turbulence in commodity markets.
DemandTec (DMAN) shares plunged 29.5% after the software company posted a net loss of four cents per share for the fourth quarter on a GAAP basis, vs. a loss of 24 cents a year ago, on a 42% increase in revenue. William Blair downgraded the stock to market perform from outperform, citing concerns about DemandTec's exposure to the U.S. retail market.
European stock markets were trading higher on Friday. In London, the FTSE 100 index advanced 0.37% to 5,874.50. In Paris, the CAC 40 index was up 0.64% at 4,897.32. Germany’s DAX index climbed 0.52% to 6,755.60.
Asian markets also gained strength on Friday. Japan’s Nikkei 225 index jumped 4.21% to 13,189.36. The Hang Seng index in Hong Kong rose 3.18% to 23,872.43.
Treasury market
Treasury bonds strengthened on the perception that the Fed will cut interest rates by 50 basis points at its April policy meeting after seeing the March nonfarm payrolls data, S&P MarketScope said. The 10-year note climbed 23/32 to 100-02/32 for a yield of 3.49%, while the 30-year bond was up 31/32 at 100-28/32 for a yield of 4.32%.