U.S. Stocks Fall as Concern Over Europe Outweighs Jobs Report

U.S. stocks fell, trimming a weekly advance for the Standard & Poor’s 500 Index, as concern Europe’s debt crisis will worsen overshadowed faster-than forecast growth in American employment.

The S&P 500 retreated 0.8 percent to 1,155.53 at 4 p.m. New York time, according to preliminary closing data. The index fell as much as 1.3 percent and rose 0.6 percent.

“Investors are understandably nervous,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., said in a telephone interview. His firm oversees $3.66 trillion as the world’s largest asset manager. “You don’t know what’s going to happen in Europe. The U.S. economy is growing sufficiently slowly that it’s unlikely to bring the unemployment rate down, but it doesn’t appear to be sliding back into a recession. If Europe can stabilize, chances are we’ve made a bottom in stocks.”

The S&P 500 this week came within 1 percent of extending its decline from its April peak to 20 percent, the common definition of a bear market. The gauge rallied 8.4 percent from its Oct. 4 intraday low through yesterday, and is up 2.1 percent for the week.

Jobs Data

Stocks initially rose today as Labor Department data showed employers added more payrolls than forecast in September, job gains were revised up in the prior two months and hours and earnings increased. The jobless rate held at 9.1 percent.

The rate by which data on the economy has been trailing forecasts has been decreasing since June, according to the Citigroup Economic Surprise Index. The U.S. gauge, which fell below zero on April 29 as the S&P 500 was peaking, has climbed from a low of minus-117.2 on June 3 to minus-7.5.

“We’re not in recession, but the jobs report is not a robust number,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp., which has $1.65 trillion in client assets. “Unemployment is still 9.1 percent and these numbers aren’t enough to bring it down to any great degree. Slow growth is probably the most likely path over the next three to six months.”

Pacific Investment Management Co.’s Bill Gross said job gains in September aren’t enough to sustain growth in the U.S. economy and that neither political party understands what’s needed to boost employment. The economy needs 200,000 to 250,000 new jobs per month to expand, Gross, manager of the world’s biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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