U.S. Futures Decline as Treasuries, Gold Rally on Weaker Employment Report

U.S. stock-index futures fell, erasing an earlier gain, and Treasuries rallied after jobs growth trailed economists’ estimates in November and the unemployment rate unexpectedly increased, damping optimism about the economic recovery. Gold surged and oil retreated.

Futures on the Standard & Poor’s 500 Index expiring this month lost 0.5 percent to 1,217.1 at 8:36 a.m. in New York after climbing as much as 0.4 percent before the jobs report. Dow Jones Industrial Average futures slid 46 points, or 0.4 percent, to 11,317. The yield on the 10-year Treasury note lost seven basis points to 2.92 percent. Gold for immediate delivery rallied 0.8 percent and oil slipped 0.4 percent from a two-year high.

The Labor Department said U.S. payrolls increased by 39,000 last month, trailing the median economist estimate in a Bloomberg News survey for an increase of 150,000 jobs. The jobless rate rose to 9.8 percent from 9.6 percent.

The S&P 500 has rallied 19 percent from its 2010 low in July as corporate profits improved and the Federal Reserve expanded its asset-purchase program to suppress interest rates and stoke the economic recovery.

Stocks rallied for a second day yesterday, giving the Dow Jones Industrial Average its biggest back-to-back rally since July, as U.S. home sales and retail purchases topped estimates and Goldman Sachs Group Inc. advised buying banks on prospects for an improving economy. The Dow and S&P 500 are up more than 3 percent each so far in December.

The Dow average has rallied in December more than in any other month over the last century, according to data compiled by Bespoke Investment Group. On average, the 30-stock gauge has risen 1.3 percent in the month during the past 100 years, while gaining 1.5 percent and 1.7 percent over the last 50 and 20 years, respectively, the data show.

Stocks fell for the first two days of this week amid concern that Europe’s sovereign debt crisis will spread. European Central Bank President Jean-Claude Trichet yesterday said the bank will delay the withdrawal of stimulus measures and purchased more government bonds.

To contact the editor responsible for this story: Michael Regan at mregan12@bloomberg.net

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