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Markets & Stocks
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Stock shock
Two surprises -- a bad jobs report and the resignation of Treasury Secretary -- knock stocks lower.
December 6, 2002: 9:49 AM EST

NEW YORK (CNN/Money) - Two shocks -- a bad monthly jobs report and the resignation of Treasury Secretary Paul O'Neill -- knocked stocks lower early Friday.

Around 9:35 a.m. ET, the Nasdaq composite (down 13.34 to 1397.41, Charts), Dow Jones industrial average (down 91.59 to 8531.69, Charts) and Standard & Poor's 500 index (down 7.13 to 899.42, Charts) all declined.

Unemployment rose to 6.0 percent in November, the Labor Department said, surprising economists who were expecting only a modest rise to 5.8 percent from 5.7 percent in the previous month. Employers also cut 40,000 jobs last month from after adding a revised 6,000 jobs the previous month. Economists surveyed by Briefing.com expected employers to add 35,000 new jobs.

The news was particularly surprising as weekly jobless claims have shown declines for the last two weeks.

Also undermining investor confidence was news that Treasury Secretary Paul O'Neill is resigning, effective in the next few weeks. O'Neill is the second major member of Bush's economic team to resign of late, following Security and Exchange Commission Chairman Harvey Pitt a month ago.

The pessimism also took its toll on shares of Intel (INTC: down $0.41 to $18.55, Research, Estimates), which had seemed primed to rise after the No. 1 chipmaker issued an improved forecast as part of its mid-quarter update after the close of trade Thursday.

The company said that its fourth-quarter revenue will be in a range of $6.8 billion to $7.0 billion, an improvement on previous guidance for a range of $6.5 billion to $6.9 billion; analysts were looking for about $6.74 billion. The company attributed the improved outlook to better sales in Asia and stronger demand for its microprocessors. But on the downside, the company said little to reassure investors worried about a slowdown in information technology spending.

In other corporate news, IBM (IBM: down $1.81 to $81.25, Research, Estimates) has agreed to buy Rational Software (RATL: up $2.09 to $10.26, Research, Estimates), a software development firm, for $2.1 billion in cash, or about $10.50 per share. IBM plans to merge the company's business operations and employees into its software group as a new division.

In international trade, European markets were little changed at midday, while Asian-Pacific stocks ended modestly lower, with Tokyo's Nikkei index down 0.6 percent.

Treasury prices surged following the labor report, sending the 10-year note yield down to 4.00 percent from 4.11 percent late Thursday. The dollar weakened against the euro and the yen.

Brent oil futures fell 4 cents to $25.47 a barrel in London. Gold was higher.  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.