NEW YORK (CNN/Money) -
The major stock indexes fell hard Friday, with the impact of the morning's disappointing payrolls report kicking in sharply near the close. But the declines failed to wipe out four mostly upbeat sessions, leaving the market up for the week.
The Dow Jones industrial average (down 133.55 to 10458.89, Charts) fell 1.2 percent, the Standard & Poor's 500 (down 10.06 to 1121.86, Charts) index lost 0.9 percent and the Nasdaq composite (down 13.33 to 2086.92, Charts) lost 0.6 percent.
But the Nasdaq still managed a strong 4 percent gain for the week, the S&P 500 gained 1.2 percent this week and the Dow industrials inched up 0.5 percent on the week.
The unemployment rate dropped to 5.7 percent from 5.9 percent in December, a bigger drop than had been expected. However, only 1,000 jobs were added to non-farm payrolls in the last month of 2003, when economists were expecting employers to create 148,000 new jobs. In addition, the previous month's payroll number was downwardly revised.
December was the fifth month of minimal additions to payrolls, even as the economy has been growing and the stock market surging.
Stocks sold off sharply at the open, but technology and interest-rate sensitive issues seemed to recover throughout the session, with some taking a "glass half full" attitude about the job market weakness, seeing it as a verification that interest rates won't budge for some time.
The indexes then fell sharply in the late afternoon and finished the day with large declines.
"The market is strong, but we're a bit overbought and some complacency has set in," said Peter Green, a market analyst at MKM Partners. "Strong economic growth is already reflected in the stocks and a lot of the good earnings news has already been priced in. I think we could trade sideways for a while.
Stocks rallied sharply Thursday after Nokia and several other companies issued positive fourth-quarter earning forecasts, seeming to confirm Wall Street's view that the quarter will show strong year-over-year results. However, earnings related-news Friday was somewhat less bullish, and therefore provided little counterpoint to the negative payroll numbers.
The earnings reporting season heats up next week. While Monday and Tuesday don't offer much in the way of influential companies, Wednesday brings earnings from Delta Air Lines (DAL: Research, Estimates), Apple (AAPL: Research, Estimates), Intel (INTC: Research, Estimates) and Yahoo! (YHOO: Research, Estimates). On Thursday, Sun Microsystems (SUNW: Research, Estimates) reports, as well as a number of banks including Banc of America (BAC: Research, Estimates). General Electric (GE: Research, Estimates) is due Friday.
No economic reports are due Monday, however a slew of data are due later in the week on producer prices, consumer prices, manufacturing, retail sales, and consumer sentiment, among others.
Friday's movers
Selling was pretty broad, with 26 out of 30 Dow components closing in the red.
After the close of trade Thursday, Dow component Alcoa (AA: down $1.41 to $37.25, Research, Estimates) kicked off the U.S. earnings reporting period but its results were disappointing. The aluminum maker reported earnings of 39 cents per share, a nickel more than Wall Street had expected and a recovery from a loss posted a year earlier. But the earnings included $105 million in gains from insurance settlements and benefited from the company's low tax rate. The stock tumbled 3.6 percent and was one of the Dow's biggest losers.
Fellow Dow component IBM (IBM: down $1.83 to $91.21, Research, Estimates) also declined. Late Thursday, Big Blue said it received notice that federal regulators might take civil action against the company for potentially violating securities laws.
The Dow's telecoms also fell, with SBC Communications (SBC: down $1.39 to $26.20, Research, Estimates) down 5 percent and AT&T (T: down $0.92 to $21.06, Research, Estimates) down 4.2 percent.
Merrill Lynch downgraded SBC to "sell" from "neutral," citing valuation and tough growth prospects. Deutsche Bank Securities also downgraded AT&T stock to "sell" from "hold."
Ford Motor (F: down $0.54 to $16.56, Research, Estimates) was also among the losers after it said earnings this year would come in at $1.20 to $1.30 a share, compared with analysts' expectations for $1.27 a share. The stock shed 3.1 percent.
Lucent Technologies (LU: down $0.18 to $3.70, Research, Estimates) lost 4.6 percent and topped the NYSE after Morgan Stanley downgraded it to "equal weight" from "overweight," saying the stock's huge run relative to earnings makes it expensive.
Silicon Graphics (SGI: up $0.28 to $2.37, Research, Estimates) rallied for the second session in a row on active NYSE trade after the computer maker said fiscal second-quarter revenue would come in near the high end of its previous forecast.
News that the national terror alert was lowered today to "elevated" (or yellow) from "high" (or orange), failed to provide investors any relief.
Market breadth was mixed to negative. On the New York Stock Exchange, winners and losers were pretty evenly split as 1.65 billion shares traded. On the Nasdaq, losers beat winners by nearly 3 to 2 as 2.46 billion shares changed hands.
Treasury prices zoomed higher after the jobs report. The benchmark 10-year note saw its price climb 1-14/32 points and its yield drop to 4.08 percent from 4.25 percent late Thursday. The dollar continued to slip against the yen and euro.
NYMEX light sweet crude oil futures added 33 cents to settle at $34.31 a barrel. COMEX gold rose $2.40 to settle at $426.80 an ounce.
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