Closing Market Report
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Stock indexes decline ahead of jobs report
By Tim Paradis
Associated Press
NEW YORK » Stocks declined for a second straight session yesterday as Wall Street grew nervous ahead of the government's November jobs creation report and its implications for the health of the overall economy.
The skittishness came despite upbeat news from the Labor Department, which said, as expected, that the number of newly laid off workers seeking unemployment benefits fell last week by the largest amount in six months. A spike in jobless claims in the previous week stirred concern among investors that perhaps the economy was losing steam too quickly. Fluctuations tend to be wider around the holidays and tomorrow's Labor Department report should provide some clarity about the labor market.
Wall Street hopes the job market will hold up well enough to safeguard consumer spending, though investors also are concerned that high employment levels will make it more expensive for businesses to hire and retain workers. As the Federal Reserve has said it remains vigilant about inflation, a rise in wages could make it harder for the central bank to justify a cut in short-term interest rates.
Nicholas Raich, director of equity research at National City Investments' private client group, contends that while yesterday's jobs figures and other data seem to suggest an economic soft landing is in the offing, some investors are nevertheless looking to cash in some of their gains, thinking the market has topped out. "We think the market is moving closer to fair value," he said.
The Dow Jones industrial average fell 30.84, or 0.25 percent, to 12,278.41.
Broader stock indicators also fell. The Standard & Poor's 500 index remained near a six-year high but was down 5.61, or 0.40 percent, to 1,407.29, and the Nasdaq composite index fell 18.17, or 0.74 percent, to 2,427.69.
Weakness in energy, consumer discretionary and technology stocks added to overall selling pressure. Light, sweet crude rose 30 cents to $62.49 a barrel on the New York Mercantile Exchange.
Raich said the latest job figures show the economy to be resilient. "It's in a great spot right now in that it's not too strong and not too weak."
He contends the data suggest the economy can pull off a soft landing rather than slowing too quickly and tipping into recession. Investors are looking to Friday's job creation number to gain further insight into whether such a gradual slowdown will occur. A continuation of robust consumer spending is important as it accounts for two-thirds of economic activity and has helped propel the economic expansion of recent years.