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Stocks Fall on Weak Job Growth, Intel

Posted on: Friday, 5 December 2003, 06:00 CST

Stocks retreated Friday after a report on November employment revealed disappointing growth in new jobs. Intel Corp. led tech shares lower after announcing a large write-down.

In afternoon trading, the Dow Jones industrial average was off 73.77, or 0.8 percent, at 9,857.05, wiping out Thursday's 57-point gain. Broader stock indicators also fell, led by the technology group. The Standard & Poor's 500 index was down 8.25 or 0.8 percent at 1,061.47, the Nasdaq composite index was down 29.34 or 1.5 percent to 1,939.46, and the Russell 2000 index of smaller companies was down 4.80 or 0.9 percent at 539.35.

The Labor Department reported that the nation's unemployment rate slipped to 5.9 percent in November, the lowest level in eight months. But investors focused on a negative part of the report showing U.S. companies added 57,000 new jobs in November, well below the 150,000 analysts had been expecting.

Poor job creation has been a consistent concern in recent weeks even as other signs of a strong recovery have emerged. Economists worry that U.S. companies, in a bid to keep operating costs low, are producing more overseas where salaries are lower rather than hiring in the states. Without growth in jobs and salaries here, there are fears that consumer spending may sputter, undermining the recovery.

"We need 150,000 jobs per month just to maintain unemployment at the current level and to keep up with the population entering the work force, and we haven't seen that amount of growth in more than two and a half years," said Lawrence Mishel, president of the Economic Policy Institute, a Washington-based think tank.

Notably, the employment report showed that job losses at U.S. factories continued for the 39th consecutive month in November, with payrolls falling by 17,000. But the pace has slowed, and in a sign of possibly better days ahead for manufacturing, the Commerce Department said Friday that new orders to U.S. factories rose by 2.2 percent in October, the strongest increase in 15 months and the fifth in the past six months.

The tech sector was lower after chip maker Intel warned investors late Thursday it would take a $600 million charge after one of its wireless businesses failed to meet expectations. Intel shares fell $1.50 to $32.04.

Among the Dow's other tech components, International Business Machines Corp. was down 80 cents at $90.62, and Hewlett-Packard Co. was down 49 cents at $22.11. Elsewhere in the Dow, Boeing Co. was down $1.16 at $37.95 and Alcoa Inc. was down 53 cents at $34.92.

Going against the trend was Caterpillar Inc., up $1.45 at $76.39 following an upgrade from Citigroup Smith Barney.

Declining issues outnumbered advancing ones by a 4-to-3 ratio on the New York Stock Exchange, where volume came to 950 million shares, down from Thursday's pace.

Overseas, Japan's Nikkei stock average fell 0.5 percent, Britain's FTSE 100 fell 0.3 percent, and France's CAC-40 fell 1.1 percent, and Germany's DAX index was down 0.9 percent.

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