Stocks Fall on Weak Economic Data

The unemployment rate rose to 5.7%, and General Motors reported a $27-per-share quarterly loss

Stocks fell Friday after a $15.5 billion loss reported by General Motors (GM), and a mixed bag of economic data that included an uptick in the unemployment rate to 5.7% in July.

U.S. nonfarm payrolls fell 51,000 in July, following a 51,000 drop in June. Average hourly earnings rose 0.3% in July, while the workweek fell to 33.6 hours, from 33.7. The 5.7% unemployment rate is an increase from the 5.5% rate in May and June.

Despite the worsening labor picture, the data in the July jobs report was better than most economists expected. "Most of the headline data aren't as bad as feared," Action Economics said.

However, John Ryding of RDQ Economics said numbers in the report "further [add] to the case that the U.S. is in recession." He added the data "suggest that the third quarter got off to a fairly weak start." The report bolstered his belief that the Federal Reserve will not raise interest rates through the end of the year.

General Motors posted a second-quarter net loss of $27.33 per share, the third-largest loss in its history, compared to earnings of $2.29 a year ago. Revenue fell 18%.

On Friday, the Dow Jones industrial average fell 51.7 points, or 0.45%, to 11,326.32. The broader S&P 500 fell 7.07 points, or 0.56%, to 1,260.31. The tech-heavy Nasdaq composite shed 14.59 points, or 0.63%, to 2,310.96.

On both the Nasdaq and the New York Stock Exchange, about as many stocks gained in price as fell. Trading volume was moderate.

Oil prices rose Friday. On the NYMEX, crude oil for September delivery gained $1.02 to $125.10 per barrel.

In other economic news Friday, the U.S. ISM manufacturing index largely met expectations by falling to 50.0 in July, down from 50.2 in July.

U.S. construction spending fell 0.4% in June following flat spending in May. Total spending is off 5.9% from a year ago, with residential construction off 26.4% from a year ago. Non-residential spending up 10.8% from last year.

Next week, Wall Street will get data on factory orders and personal income on Monday; consumer confidence and the non-manufacturing ISM index on Tuesday; pending home sales on Thursday; and productivity on Friday. But, other than many more earnings reports, the main event is likely be the Tuesday meeting of the Federal Reserve's policy-setting committee, which is expected to hold interest rates steady.

"We expect the Federal Reserve to do nothing Tuesday," said Standard & Poor's chief economist David Wyss. "The economic data have been in line with expectations, but with employment down for the seventh consecutive month and the unemployment rate up again, it would be hard to raise rates."

Among stocks in the news, Lehman Brothers (LEH) is reportedly negotiating to offload about $30 billion in commercial mortgage assets and other securities in an effort to clean up the investment bank's troubled balance sheet, the New York Post reports.

Chevron Corp. (CVX) posted earnings of $2.90 per share, vs. $2.52 a year ago, as revenue rose 48%.

Ingersoll-Rand Co. (IR) reported earnings of 90 cents, vs. 68 cents a year ago. Revenue increased 38%.

NYSE Euronext (NYX) posted lower-than-expected earnings of 75 cents, vs. 64 cents a year ago. Wall Street analysts were expecting earnings of 78 cents per share. Revenue rose 7.1%.

Oshkosh Corp. (OSK) reported earnings of $1.19 per share, vs. $1.21 a year ago, as sales rose 11%. Including a charge, the company posted a $1.14 loss in the quarter.

Morningstar (MORN) posted earnings of 57 cents per share, vs. 38 cents a year ago. Revenue increased 21%.

Major European indexes were lower Friday. In London, the FTSE 100 index lost 1.06% to 5,354.70. In Paris, the CAC 40 dropped 1.78% to 4,314.34, while Germany's DAX index fell 1.28% to 6,396.46.

In Asia, Japan's Nikkei 225 lost 2.11% to 13,094.59, while Hong Kong's Hang Seng Index added 0.58% to 22,862.60.

Treasury market

Treasury prices were narrowly higher Friday. The two-year Treasury rose 01/32 to 100-16/32 for a yield of 2.49%; the 10-year notes rose 04/32 to 99-18/32 for a yield of 3.93%; and the 30-year bond was up 06/32 to 97-00/32 for a yield of 4.56%.

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