Stocks are showing modest weakness during mid-morning trading on Friday, as investors respond to some negative news on the job market and the service sector. The major averages have slipped well below the unchanged line after seeing some early uncertainty.
Earlier, the Labor Department said that non-farm payroll employment fell by 663,000 jobs in March following an unrevised decrease of 651,000 jobs in February. The drop in jobs came roughly in line with economists' expectations of a decrease of 658,000 levels.
With the continued decrease in jobs, the unemployment rate rose to 8.5 percent in March from 8.1 percent in the previous month, in line with expectations. The increase lifted the unemployment rate to its highest level since November of 1983.
While the report looks backward at job losses already posted, traders still don't want to see big growth in the number of people out of work, because it is likely to crimp consumer spending and the economy's attempts to recover.
Meanwhile, the Institute for Supply Management released its report on activity in the service sector for March, showing that the index of activity in the sector unexpectedly fell to 40.8 in March from 41.6 in February, with a reading below 50 indicating a contraction in the sector.
In other news, President Obama delivered a speech in Strasbourg, France. Obama focused on rebuilding the relationship between Europe and America, noting the need for unity across the Atlantic as nations face terrorist and economic threats.
We find ourselves at a crossroads, Obama said. The same forces that have brought us closer together have also given rise to new dangers that threaten to tear our world apart.
The president said that he plans to lay out a plan in Prague over the weekend that will offer a goal of a world without nuclear weapons.
We cannot reduce the threat of a nuclear weapon going off unless those who possess the threat of a nuclear weapon.take drastic action to reduce stockpiles, Obama said in the question and answer portion of the town hall meeting.
Meanwhile, Federal Reserve Chairman Ben Bernanke will speak at the Richmond Fed's Credit Markets Symposium in Charlotte, NC at about noon ET.
On the corporate front, Research In Motion Ltd. (RIMM) is moving sharply higher after the company reported fourth quarter earnings that beat expectations and provided some better-than-anticipated guidance for the upcoming quarter.
In recent trading, the major averages have moved well off their lows for the session, although they currently remain in negative territory. The Dow is currently down 38.15 at 7,939.93, the Nasdaq is down 1.65 at 1,600.98 and the S&P 500 is down 3.53 at 830.85.
While the weakness in the broader markets is modest, many of the major sector indices are posting noteworthy losses on the day.
Health insurance stocks are posting some of the widest losses, helping to push the Morgan Stanley Healthcare Payor Index down 2.4 percent. With the decline, the index has pulled back well off of the one month closing high it set in the previous session.
Gold stocks are also showing continued weakness after being some of the only losers in the previous session. The 2.7 percent loss being shown by the Amex Gold Bugs Index comes as the price of the precious metal is falling by $3.50 to $905.40 an ounce.
Biotechnology, pharmaceutical, and real estate stocks are also posting considerable losses on the day. The Amex Biotechnology Index is down 2.1 percent, while the Amex Pharmaceutical Index and the Morgan Stanley REIT Index are down 1.8 percent and 1.5 percent, respectively.
At the other end of the spectrum, wireless, oil services, and computer hardware stocks are posting some of the biggest gains of the session.
Stocks Driven By Analyst Comments
Despite the weakness in the broader markets, IntercontinentalExchange (ICE) is posting a gain of 7.3 percent on the day after being upgraded to Buy from Neutral at Goldman Sachs. With the advance, the stock has risen to its highest level in three months.
The upgrade was based on stable earnings trends and potential benefits from regulatory changes. Analysts believe that additional OTC clearing opportunities, cap and trade-related developments, and price increases in commodities could potentially increase upside.
Additionally, FMC Technologies (FTI) is up 3.7 percent after being upgraded to Buy from Hold at Jefferies and having its price target increased to $45 from $27. The upgrade is based on the strong multi-year outlook for subsea activity and expectations for solid order flow in 2010.
Meanwhile, Akamai (AKAM) is suffering a loss of 8.3 percent following a downgrade at Citigroup to Hold from Buy. The downgrade reflected concerns about valuation, with the stock up 43 percent year-to-date.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher, adding to the strong gains posted in the previous session. Japan's benchmark Nikkei 225 Index closed up 0.3 percent, although well off its best level of the day.
Meanwhile, the major European markets have all fallen below the unchanged line after some earlier uncertainty. The French CAC 40 Index and the U.K.'s FTSE 100 Index are down 1.2 percent and 2.2 percent, respectively, while the German DAX Index is posting a more modest 0.2 percent loss.
In the bond market, treasuries are showing some weakness on the day, although they have come off their intraday lows. Subsequently, the yield on the benchmark 10-year note is up 5.3 basis points at 2.805 percent.
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