Stocks Finish Modestly Lower

Traders eyed a strong August jobs report and sharply lower energy prices. Investors continued to digest the level of devastation caused by Katrina

Stocks finished slightly lower in light trading Friday ahead of the Labor Day holiday weekend. The market remained in a holding pattern, following a report on the labor market in August, sharply lower oil prices, and reports of chaos in New Orleans in aftermath of Hurrican Katrina, while traders waited to understand the full impact of the hurricane.

The Dow Jones industrial average fell 12.26 points, or 0.12%, to 10,447.37. The broader Standard & Poor's 500 index fell 3.57 points, or 0.29%, to 1,218.02. The tech-heavy Nasdaq composite index went down 6.83 points, or 0.32%, moving to 2,141.07.

"Even though this latest episode will slow economic growth in 2006, I think the market [realizes] we're not headed for recession -- so it's trading in range," says Peter Cardillo, chief strategist for S.W. Bach.

Crude oil finished sharply lower in holiday-shortened trading following reports that some refineries and natural gas lines have been able to resume operations in the Gulf region. Also, the International Energy Agency has agreed to release energy supplies to the U.S., according to press reports. The price of October crude futures settled down $1.88 to $67.59 a barrel. Meanwhile, natural gas moved slightly lower, while heating oil plunged by more than 4%.

In economic news, U.S. non-farm payrolls rose by 169,000 in August from a revised 242,000 in July, an increase that fell short of most economists' expectations. However the unemployment rate fell to 4.9%, the lowest in years. The employment numbers aren't expected to have much impact on the markets, since they do not factor in the effects of Hurricane Katrina.

In company news, the machinists' union at Boeing (BA ) voted to strike, rejecting a three-year contract offered by the jet manufacturer. It will be the first halt to production at the company in ten years.

Accounting firm H&R Block (HRB ) announced its first-quarter earnings results. The company reported a loss of 9 cents for the quarter, vs. an 11-cent loss during the same period a year ago, on a 26% rise in revenue. The company also reaffirmed its earnings outlook for the 2006 fiscal year.

Northwest Airlines (NWAC ) said it expects a third-quarter loss of between $350 and $400 million. Standard & Poor's reiterated its strong sell rating on the stock.

Treasury Market

Treasuries ended mixed in a holiday-shortened session. The 10-year note edged down 2/32 in price to 101-24/32 for a yield of 4.03%. The 30-year bond rose 8/32 to 116-21/32 for a yield of 4.29%. Trading was range-bound ahead of the holiday weekend, reports S&P MarketScope, with the market showing a muted reaction to the August jobs release.

World Markets

European stock markets finished modestly lower. London's Financial Times-Stock Exchange 100 index was down 1.70 points, or 0.03%, to 5,326.80.

Germany's DAX index fell 5.13 points, or 0.11%, moving to 4,837.81.

In Paris, the CAC 40 index lost 19.20 points, or 0.43%, moving to 4,404.95.

In Asia, markets finished higher. Japan's Nikkei 225 index rose 93.03 points, or 0.74%, to 12,600.00.

In Hong Kong, the Hang Seng index rose 78.14 points, or 0.52%, to 15,221.89.

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