Stocks slip on jobs jitters

NEW YORK (CNNMoney.com) -- Technology shares slumped, dragging down the broader market at the end of a tumultuous session dominated by concerns about the November employment report, due Friday.

The Dow Jones industrial average (down 32.13 to 12,277.12, Charts) lost nearly 0.3 percent. In the morning, the blue-chip average topped its record closing high from November and flirted with a new record trading high before backing off.

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The broader S&P 500 (down 4.79 to 1,408.11, Charts) index lost 0.4 percent after briefly topping a six-year high hit earlier in the week. The tech-fueled Nasdaq (down 14.44 to 2,431.42, Charts) composite lost 0.7 percent.

The three major gauges rose across the board in the morning, with the Dow industrials flirting with a new record trading high, and the Nasdaq and S&P 500 treading near 6-year highs.

However, any advance was limited by concerns about Friday's jobs report. Those concerns amped up in the afternoon, weighing on a stock market that was probably already vulnerable after hitting such lofty highs.

"Everyone's biting their nails, waiting for the jobs report," said James Awad, president at Awad Asset Management.

Employers are expected to have added 105,000 jobs to their payrolls in November, according to a consensus of economists surveyed by Briefing.com. Employers added 92,000 jobs in the previous month.

A number that is just slightly better than estimates might reassure investors concerned about the economic slowdown. However, a payrolls number substantially above forecasts could raise worries about wage inflation, something the Federal Reserve Board has said it is monitoring.

Yet, the number is rarely in line with forecasts. In addition, a few recent reports have suggested payroll growth could be better than estimates. They include: Wednesday's bullish report on November hiring in the private sector, and Thursday's weekly survey, which showed a bigger-than-expected drop in new claims for unemployment.

The unemployment rate, generated by a different survey than the payrolls, is expected to have inched up to 4.5 percent from 4.4 percent in October.

Average hourly earnings, the report's inflation component, are expected to have risen 0.3 percent after rising 0.4 percent in November.

On a bigger level, investors are looking for the report to offer a clearer sense of growth going forward, said Todd Salamone, director of trading at Schaeffer's Investment Research, particularly following two weeks of varying economic reports.

"The issue is how much are we going to slow economically, and what does that mean for interest rates and the market," he said.

Unfortunately, the jobs report is unlikely to resolve these questions, said Awad.

"What's more likely is that we get a report that confuses everyone," he said.

The November consumer sentiment report from the University of Michigan is due after the start of trading Friday, but is bound to be overshadowed by the jobs report.

Stocks likely to be active Thursday include Hewlett-Packard (Charts), which said after the close of trade that it has reached a civil settlement with the California Attorney General regarding the corporate spying case. (Full story).

Also, after the close, National Semiconductor (Charts) reported fiscal second-quarter earnings and revenue, and gross margins, that fell from a year ago due to higher inventories. The company also issued a current-quarter revenue forecast that is short of expectations.

Beyond Friday, the next focus will be the Fed's last monetary-policy meeting of the year next Tuesday. At that meeting, the central bank is widely expected to leave a key short-term interest rate unchanged for the fourth time in a row.

The Fed funds rate currently stands at 5.25 percent, after the central bank boosted rates 17 straight times over a two-year period.

On Thursday, the European Central Bank (ECB) boosted its benchmark lending rate by a quarter-percentage point to 3.50 percent, as expected. However, the bank implied it might not raise rates again at its next meeting and also lowered its 2007 forecast on inflation, due to lower oil prices.

Home Depot (down $0.99 to $38.93, Charts) said that a review showed it had unrecorded expenses of about $200 million connected to stock options. The home improvement retailer said that fixing the problem would have little effect on its finances. Nonetheless, investors sent shares of the Dow component 2.5 percent lower.

Home Depot is one of many companies facing probes into the potential manipulation of stock option grants.

Fannie Mae, the mortgage financer, said late Wednesday that it overstated earnings between 2001 and 2004 by $6.3 billion, a smaller amount than had been expected in the aftermath of the company's accounting scandal.

Fannie Mae (up $1.11 to $59.61, Charts) shares gained nearly 2 percent Thursday.

General Motors (down $0.32 to $29.05, Charts) said late Wednesday that its market share has bottomed out and that it sees crossover vehicles as the means of driving market share gains in the future. Nonetheless, the stock slipped.

Among technology decliners, Oracle (down $0.38 to $17.50, Charts) slipped for a second session after Lehman Bros. said Wednesday that investors should sell the stock ahead of the company's quarterly earnings report.

Other tech sliders included Dell (down $0.16 to $26.42, Charts), eBay (down $0.86 to $31.30, Charts) and Apple Computer (down $2.79 to $87.04, Charts).

A variety of homebuilders slipped after rising for the last few sessions. Decliners included Lennar (down $0.92 to $53.25, Charts), Hovnanian (down $1.26 to $36.75, Charts) and Toll Brothers (down $1.17 to $31.84, Charts).

On the upside, a variety of gold, silver and steel shares gained, with the commodities bouncing back after several down sessions.

Among other movers, Vanda Pharmaceuticals (up $10.65 to $26.15, Charts) jumped 69 percent in unusually active Nasdaq trade after its experimental schizophrenia drug was effective in a late-stage trial.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers six to five on volume of 1.45 billion shares. On the Nasdaq, losers topped winners three to two on volume of 2.08 billion shares.

U.S. light crude oil prices for January delivery added 30 cents to settle at $62.49 a barrel on the New York Mercantile Exchange.

COMEX gold rose $1.10 to $637 an ounce.

Treasury prices were little changed, with the yield on the benchmark 10-year note at 4.48 percent, roughly where it stood late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar was little changed versus the euro and yen.

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