US Payrolls decline by 63,000
Global Market
Employers unexpectedly cut jobs in February for the second consecutive month, adding to evidence the U.S. is in a recession that may dominate the economic debate in this year's presidential campaign.
Payrolls fell by 63,000, after a revised decline of 22,000 in January. The jobless rate dropped to 4.8 percent, reflecting a shrinking labor force as some people gave up looking for work.
The weakening labor market, combined with lower home prices, higher fuel bills and a global credit queeze, may force consumers to further reduce spending. Minutes before the figures were released, the Federal Reserve said it will expand two short- term auctions this month to $100 billion in an effort to address a deepening credit crisis. Traders anticipate the central bank will also cut interest rates again.
Traders now anticipate Fed will cut the benchmark rate by at least three quarters of a percentage point at or before their March 18 meeting.
Payrolls at builders fell 39,000. Homebuilders are trimming staff as the biggest housing slump in a quarter century deepens. To make matters worse, commercial construction projects are now also on the decline, indicating firings at non-residential builders are likely to increase.
Service industries added 26,000 workers last month. Retail payrolls fell by 34,100, the biggest drop in more than five years.
The real estate recession and meltdown in financial markets have led to growing dismissals at banks, mortgage and management companies.
Manufacturing payrolls dropped by 52,000, after falling 31,000 a month earlier.
Government payrolls increased by 38,000. That means the total decline in private payrolls for the month was 101,000.
The Federal Reserve may keep cutting interest rates and postpone the ``rapid reversal'' of reductions that officials discussed in January, as the housing rout erodes hiring and spending.
Increasing signs the U.S. is in a recession spurred traders to bet the Fed will cut its benchmark rate as low as 1.75 percent by June. The weakening housing and labor markets are also putting pressure to do more to stem the surge in foreclosures and ease a shortage of cash in money markets.
The Treasury Department, which has opposed the use of taxpayer money to shore up the housing industry, is talking to banks, other regulators and community advocates about further steps to curb foreclosures.
Stock Market
U.S. Stock
U.S. stocks fell for a second day after the biggest drop in jobs since 2003 sent energy and mining companies lower, overshadowing an advance in banks spurred by a Federal Reserve plan to make more cash available to lenders.
Chevron Corp., Alcoa Inc. and Boeing Co. led declines that sent the Dow Jones Industrial Average below 12,000 for the first time in two months and the Standard & Poor's 500 Index to its lowest level since August 2006. Wells Fargo & Co. and CIT Group Inc. gained, helping spur a 2.5 percent advance in financial stocks during the final 90 minutes of trading.
The S&P 500 retreated 10.97 points to 1,293.37. The Dow average lost 146.7 to 11,893.69. The Nasdaq Composite Index decreased 8.01 to 2,212.49.
The indexes decline after the Labor Department reported a loss of 63,000 jobs last month. The benchmark for U.S. equities is down 12 percent this year on concern that the first decline in home prices since the Great Depression and record foreclosures will curb bank lending.
Energy companies contributed the most to the S&P 500's decline after crude oil slid 0.3 percent to 105.15 a barrel on concern the U.S. has tipped into a recession. Exxon Mobil Corp. fell to $82.49. Chevron lost $2.54 to $85.26. Schlumberger Ltd. slipped $2.05 to $85.61.
Banks and brokerage firms limited today's decline. Before the jobs report, the Fed announced additional measures to enable financial institutions to make loans. Banks and securities firms have posted losses of at least $188 billion since the start of last year as the impact of surging defaults on subprime mortgages rippled through world financial markets.
Wells Fargo added 28 cents to $28.11. CIT Group climbed $1.06 to $16.92. Washington Mutual Inc. fell $1.05 to $10.71. Monsanto Co. slumped $7.96 to $106.46.
Peabody Energy Corp. and Consol Energy Inc. led a decline in coal companies. Coal fell as increased production in South Africa and reduced demand for U.S. exports to Europe.
National Semiconductor Corp. rose $1.91 to $18.25. Their third-quarter earnings beat analysts' estimates and said profitability probably will improve in the current period.
Ciena Corp. gained $2.86 to $27.80. Their first-quarter profit doubled as phone companies spent more on upgrades, and boosted its sales forecast.
Smith & Wesson Holding Corp. climbed 67 cents to $4.95. Their sales increased 23 percent to $66.1 million.
The Russell 2000 Index dropped to 660.11. The Dow Jones Wilshire 5000 Index fell to 13,052.35.
Asian Stocks
Asian stocks fell the most this week since August on concern rising credit costs will dent bank earnings and slowing U.S. growth will curb demand for televisions and cameras.
Mitsubishi UFJ Financial Group Inc. and Westpac Banking Corp. dropped as credit risk in the region rose to records, signaling expectations of an increase in global loan defaults. Sony Corp. and Samsung Electronics Co. led declines among companies reliant on U.S. sales after manufacturing shrank and mortgage foreclosures climbed.
The MSCI Asia Pacific Index declined 5.4 percent to 139.61. Financial stocks posted the second-largest percentage decrease among the index's 10 industry groups, trailing energy shares.
The MSCI regional measure has fallen 12 percent this year on concern a U.S. housing slump will drag the world's largest economy into recession and slow global growth.
Most benchmarks in the region fell, with India's Sensitive Index slipping 9.1 percent. Japan's Nikkei 225 Stock Average dropped 6 percent this week. The Australian All Ordinaries Index tumbled 5.4 percent. Hong Kong's Hang Seng Index sank 7.5 percent.
Currencies
The dollar dropped for a fourth straight week against the euro after a government report showed the U.S. unexpectedly lost jobs for a second consecutive month in February.
The U.S. currency fell against the euro and the yen as the report bolstered speculation the Federal Reserve will cut interest rates this month. The currency rose from the day's lowest levels as the Fed said it will boost loans to banks, leading traders to trim bets on a cut of as much as a full percentage point at the central bank's March 18 meeting.
The dollar touched $1.5459 per euro before recovering to trade at $1.5348 per euro. The U.S. currency traded at 102.78 yen. The dollar also sank to 1.0135 Swiss francs.
The U.S. currency also rebounded because traders sold euros to protect options-related positions.
In a bid to counter a deepening credit crisis, the Fed boosted the size of auctions of four-week funds to banks from $30 billion previously to $50 billion. The Fed also said it will make $100 billion available through repurchase agreements.
The euro's RSI is above 70 for the eighth straight day, signaling the euro may be poised to decline. The last time the gauge held above 70, the euro fell about 3 percent against the dollar in the next three weeks.
The euro briefly pared some gains against the dollar earlier after ECB said to supports the U.S. strong-dollar policy.
The euro surged yesterday after ECB held rates at 4 percent and said there is ``strong pressure on inflation'' in the euro region, suggesting he's in no hurry to cut rates.
Commodities
Oil
Crude oil fell after a report showed that the U.S. lost jobs last month, signaling that demand will slow in the world's biggest energy-consuming country.
The U.S. unexpectedly lost 63,000 jobs in February, the biggest drop since March 2003, according to a Labor Department report today. Oil has risen 29 percent since Sept. 18 when the Federal Reserve made the first of five cuts to the U.S. benchmark interest rate that sent the dollar lower.
Crude oil for April delivery fell 32 cents to settle at $105.15 a barrel. Futures surged to a record $106.54 a barrel earlier today. Brent crude for April settlement declined 23 cents to $102.38 a barrel. Futures reached a record $103.98 a barrel today.
Total U.S. implied fuel demand averaged 20.6 million barrels a day in the past four weeks, down from a year earlier.
The dollar rebounded today after touching a record low against the euro. The U.S. Dollar Index, a weighted gauge against the euro, yen, pound and three other currencies, fell to the lowest since the basket started trading in 1973.
Gold
Gold fell after the dollar rebounded from a record against the euro. Silver was little changed.
The euro dropped as much as 0.4 percent after reaching $1.5459, an all-time high against the dollar. Some investors sold gold after the metal failed to top $1,000 an ounce this week during a surge to a record $995.20. Gold is up 16 percent this year.
Gold futures for April delivery declined $2.90 to $974.20 an ounce. The price earlier rose as high as $990.70 and dropped as low as $971. Gold reached a record two days ago.
Still, gold may rebound as investors seek a haven from turmoil in financial markets.
The Federal Reserve also plans to increase loans to banks this month to counter a deepening credit crisis. Silver futures for May delivery rose 2.5 cents to $20.25 an ounce. The metal reached $21.325 yesterday.
Employers unexpectedly cut jobs in February for the second consecutive month, adding to evidence the U.S. is in a recession that may dominate the economic debate in this year's presidential campaign.
Payrolls fell by 63,000, after a revised decline of 22,000 in January. The jobless rate dropped to 4.8 percent, reflecting a shrinking labor force as some people gave up looking for work.
The weakening labor market, combined with lower home prices, higher fuel bills and a global credit queeze, may force consumers to further reduce spending. Minutes before the figures were released, the Federal Reserve said it will expand two short- term auctions this month to $100 billion in an effort to address a deepening credit crisis. Traders anticipate the central bank will also cut interest rates again.
Traders now anticipate Fed will cut the benchmark rate by at least three quarters of a percentage point at or before their March 18 meeting.
Payrolls at builders fell 39,000. Homebuilders are trimming staff as the biggest housing slump in a quarter century deepens. To make matters worse, commercial construction projects are now also on the decline, indicating firings at non-residential builders are likely to increase.
Service industries added 26,000 workers last month. Retail payrolls fell by 34,100, the biggest drop in more than five years.
The real estate recession and meltdown in financial markets have led to growing dismissals at banks, mortgage and management companies.
Manufacturing payrolls dropped by 52,000, after falling 31,000 a month earlier.
Government payrolls increased by 38,000. That means the total decline in private payrolls for the month was 101,000.
The Federal Reserve may keep cutting interest rates and postpone the ``rapid reversal'' of reductions that officials discussed in January, as the housing rout erodes hiring and spending.
Increasing signs the U.S. is in a recession spurred traders to bet the Fed will cut its benchmark rate as low as 1.75 percent by June. The weakening housing and labor markets are also putting pressure to do more to stem the surge in foreclosures and ease a shortage of cash in money markets.
The Treasury Department, which has opposed the use of taxpayer money to shore up the housing industry, is talking to banks, other regulators and community advocates about further steps to curb foreclosures.
Stock Market
U.S. Stock
U.S. stocks fell for a second day after the biggest drop in jobs since 2003 sent energy and mining companies lower, overshadowing an advance in banks spurred by a Federal Reserve plan to make more cash available to lenders.
Chevron Corp., Alcoa Inc. and Boeing Co. led declines that sent the Dow Jones Industrial Average below 12,000 for the first time in two months and the Standard & Poor's 500 Index to its lowest level since August 2006. Wells Fargo & Co. and CIT Group Inc. gained, helping spur a 2.5 percent advance in financial stocks during the final 90 minutes of trading.
The S&P 500 retreated 10.97 points to 1,293.37. The Dow average lost 146.7 to 11,893.69. The Nasdaq Composite Index decreased 8.01 to 2,212.49.
The indexes decline after the Labor Department reported a loss of 63,000 jobs last month. The benchmark for U.S. equities is down 12 percent this year on concern that the first decline in home prices since the Great Depression and record foreclosures will curb bank lending.
Energy companies contributed the most to the S&P 500's decline after crude oil slid 0.3 percent to 105.15 a barrel on concern the U.S. has tipped into a recession. Exxon Mobil Corp. fell to $82.49. Chevron lost $2.54 to $85.26. Schlumberger Ltd. slipped $2.05 to $85.61.
Banks and brokerage firms limited today's decline. Before the jobs report, the Fed announced additional measures to enable financial institutions to make loans. Banks and securities firms have posted losses of at least $188 billion since the start of last year as the impact of surging defaults on subprime mortgages rippled through world financial markets.
Wells Fargo added 28 cents to $28.11. CIT Group climbed $1.06 to $16.92. Washington Mutual Inc. fell $1.05 to $10.71. Monsanto Co. slumped $7.96 to $106.46.
Peabody Energy Corp. and Consol Energy Inc. led a decline in coal companies. Coal fell as increased production in South Africa and reduced demand for U.S. exports to Europe.
National Semiconductor Corp. rose $1.91 to $18.25. Their third-quarter earnings beat analysts' estimates and said profitability probably will improve in the current period.
Ciena Corp. gained $2.86 to $27.80. Their first-quarter profit doubled as phone companies spent more on upgrades, and boosted its sales forecast.
Smith & Wesson Holding Corp. climbed 67 cents to $4.95. Their sales increased 23 percent to $66.1 million.
The Russell 2000 Index dropped to 660.11. The Dow Jones Wilshire 5000 Index fell to 13,052.35.
Asian Stocks
Asian stocks fell the most this week since August on concern rising credit costs will dent bank earnings and slowing U.S. growth will curb demand for televisions and cameras.
Mitsubishi UFJ Financial Group Inc. and Westpac Banking Corp. dropped as credit risk in the region rose to records, signaling expectations of an increase in global loan defaults. Sony Corp. and Samsung Electronics Co. led declines among companies reliant on U.S. sales after manufacturing shrank and mortgage foreclosures climbed.
The MSCI Asia Pacific Index declined 5.4 percent to 139.61. Financial stocks posted the second-largest percentage decrease among the index's 10 industry groups, trailing energy shares.
The MSCI regional measure has fallen 12 percent this year on concern a U.S. housing slump will drag the world's largest economy into recession and slow global growth.
Most benchmarks in the region fell, with India's Sensitive Index slipping 9.1 percent. Japan's Nikkei 225 Stock Average dropped 6 percent this week. The Australian All Ordinaries Index tumbled 5.4 percent. Hong Kong's Hang Seng Index sank 7.5 percent.
Currencies
The dollar dropped for a fourth straight week against the euro after a government report showed the U.S. unexpectedly lost jobs for a second consecutive month in February.
The U.S. currency fell against the euro and the yen as the report bolstered speculation the Federal Reserve will cut interest rates this month. The currency rose from the day's lowest levels as the Fed said it will boost loans to banks, leading traders to trim bets on a cut of as much as a full percentage point at the central bank's March 18 meeting.
The dollar touched $1.5459 per euro before recovering to trade at $1.5348 per euro. The U.S. currency traded at 102.78 yen. The dollar also sank to 1.0135 Swiss francs.
The U.S. currency also rebounded because traders sold euros to protect options-related positions.
In a bid to counter a deepening credit crisis, the Fed boosted the size of auctions of four-week funds to banks from $30 billion previously to $50 billion. The Fed also said it will make $100 billion available through repurchase agreements.
The euro's RSI is above 70 for the eighth straight day, signaling the euro may be poised to decline. The last time the gauge held above 70, the euro fell about 3 percent against the dollar in the next three weeks.
The euro briefly pared some gains against the dollar earlier after ECB said to supports the U.S. strong-dollar policy.
The euro surged yesterday after ECB held rates at 4 percent and said there is ``strong pressure on inflation'' in the euro region, suggesting he's in no hurry to cut rates.
Commodities
Oil
Crude oil fell after a report showed that the U.S. lost jobs last month, signaling that demand will slow in the world's biggest energy-consuming country.
The U.S. unexpectedly lost 63,000 jobs in February, the biggest drop since March 2003, according to a Labor Department report today. Oil has risen 29 percent since Sept. 18 when the Federal Reserve made the first of five cuts to the U.S. benchmark interest rate that sent the dollar lower.
Crude oil for April delivery fell 32 cents to settle at $105.15 a barrel. Futures surged to a record $106.54 a barrel earlier today. Brent crude for April settlement declined 23 cents to $102.38 a barrel. Futures reached a record $103.98 a barrel today.
Total U.S. implied fuel demand averaged 20.6 million barrels a day in the past four weeks, down from a year earlier.
The dollar rebounded today after touching a record low against the euro. The U.S. Dollar Index, a weighted gauge against the euro, yen, pound and three other currencies, fell to the lowest since the basket started trading in 1973.
Gold
Gold fell after the dollar rebounded from a record against the euro. Silver was little changed.
The euro dropped as much as 0.4 percent after reaching $1.5459, an all-time high against the dollar. Some investors sold gold after the metal failed to top $1,000 an ounce this week during a surge to a record $995.20. Gold is up 16 percent this year.
Gold futures for April delivery declined $2.90 to $974.20 an ounce. The price earlier rose as high as $990.70 and dropped as low as $971. Gold reached a record two days ago.
Still, gold may rebound as investors seek a haven from turmoil in financial markets.
The Federal Reserve also plans to increase loans to banks this month to counter a deepening credit crisis. Silver futures for May delivery rose 2.5 cents to $20.25 an ounce. The metal reached $21.325 yesterday.
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