Stocks were trading modestly lower late Friday afternoon, giving up early gains, as a drop in U.S. wholesale sales countered a solid February employment report. Investors were squaring positions as stocks wound down a volatile and winning week, amid worries about next week's reports on inflation and retail sales, says Standard & Poor's Equity Research.
In afternoon trading, the Dow Jones industrial average edged down 1.04 points, or 0.01%, to 12,259.66. The broader Standard & Poor's 500 index slipped 0.91 points, or 0.06%, to 1,400.98. The tech-heavy Nasdaq composite was down 4.42 points, or 0.19%, to 2,383.31.
In economic news, U.S. nonfarm payrolls added 97,000 in February, from an upwardly revised 146,000 in January, while the unemployment rate dipped to 4.5% from 4.6%. The headline figure matches consensus and significantly better than whispers about a weak jobs report, and the underlying report was much stronger than expected, says Action Economics.
The nonfarm payrolls data ran counter to talk of slower jobs growth. "It was really the perfect sea, when the market was pricing in the perfect storm," says Doug Roberts, founder and chief investment strategist for Channel Capital Research. "It came in across-the-board good."
The reports shows inflation, not growth, to be the Federal Reserve's likely worry going forward, others say. "These data should reassure investors that the economy continues to expand and that the household sector is in generally good shape in terms of jobs and income creation," says John Ryding, chief U.S. economist at Bear Stearns, in a note to clients. "From an inflation perspective, the decline in the unemployment rate and the elevated reading on average hourly earnings should continue to keep the Fed leaning in the direction that inflation, not growth, is the major concern at the present time."
Meanwhile, U.S. wholesale sales dropped 0.9% in January, a bigger decline than expected, weighed down by an 11.1% plunge in petroleum.
The U.S. trade deficit fell to $59.12 billion in January, after a revised $61.45 billion in December. Imports declined 0.5%, while exports were up 1.1%.
Among Friday's stocks in the news, New Century Financial (NEW) continued its slump after the subprime lender said it would stop making new loans amid rising defaults, adding to speculation the company may file for bankruptcy.
Yahoo! (YHOO) was also lower on news AT&T (T) seeks to rework a deal with the Internet media company that could reduce Yahoo! revenues.
Procter & Gamble (PG) was modestly lower after the consumer products maker reiterated its earnings guidance for the fiscal third quarter.
On the upside, National Semiconductor (NSM) was higher after the chipmaker said it will expand its stock buyback program by $500 million and reported a fiscal third-quarter profit that topped analyst estimates.
Jones Soda (JSDA) was up about 22% after the natural soda maker said its fourth-quarter profit more than tripled.
On the M&A front, Ford (F) was slightly higher on a report the automaker will sell its Aston Martin luxury-car unit to a group of investors including David Richards, founder of U.K.-based racecar parts maker Prodrive.
Elsewhere, Texas Instruments (TXN) was higher after Stifel Nicolaus upgraded the chipmaker from hold to buy.
In the energy markets, April West Texas Intermediate crude oil futures fell $1.59 to $60.05 a barrel. Profit-taking was a likely cause, says Action Economics.
European markets finished modestly higher, reversing earlier losses. The FTSE-100 index in London rose 17.5 points, or 0.28%, to 6,245.2. Germany's DAX index added 3.29 points, or 0.05%, to 6,716.52. In Paris, the CAC 40 index added 13.58 points, or 0.25%, to 5,537.84.
Asian markets ended mixed. In Japan, the Nikkei 225 index gained 73.73 points, or 0.43%, to 17,164.04. In Hong Kong, the Hang Seng index shed 40.29 points, or 0.21%, to 19,134.88. Korea's Kospi index edged down 0.32 points, or 0.02%, to 1,423.58.
Treasury yields jumped as the labor report failed to bear out speculation of weakness. The 10-year note fell in price to 100-10/32 for a yield of 4.59%, while 30-year bonds slid to to 100-14/32 for a yield of 4.72%.