Stocks expected to fall on jobs report

NEW YORK (CNNMoney.com) -- U.S. stocks were expected to fall Friday following an unexpectedly dismal reading of the nation's economy, the December employment report.

Dow Jones industrial average, Nasdaq-100 and S&P-500 futures fell immediately after the release of the December payroll report, losing their marginal gains. The report was expected to weigh heavily on trading throughout the day.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

Stocks ended mostly higher Thursday after signs of improvement in the retail sector gave the blue-chip Dow a boost, but the broader market dragged on jitters ahead of Friday's unemployment rate report. So far this week - the first trading week of 2010 - stocks have been treading water since a big rally on Monday.

David Jones, chief market strategist at IG Markets in London, said the December employment report could make or break the markets on Friday.

"If we have a worse-than-expected number today, I think it could really be a major dent in confidence, because expectations have definitely been raised," said Jones, prior to the release of the report. "Unemployment is the one remaining concern that could really scupper economic recovery today."

Economy: The government reported that employers cut 85,000 jobs in December, which was much worse than expected.

A consensus of economist opinions from Briefing.com showed that expectations were flat ahead of the report. This was changed, shortly before the release, from a consensus expectation of a loss of 35,000 jobs.

Also, the government upwardly revised its figure for November, to a gain of 4,000 jobs, from the previously reported loss of 11,000 jobs.

The unemployment rate, calculated by a separate survey, held steady at 10%, as expected.

After the bell, a report is predicted to show wholesale inventories fell 0.3% in November, according to Briefing.com consensus, after rising by the same amount in the previous month.

A separate government report is expected to show consumer credit fell by $5 billion in November, according to Briefing.com consensus, after dropping by $3.5 billion in October.

World markets: Stocks in Asia closed with gains; Tokyo's Nikkei index rallied 1.1%. European indexes were mostly higher in midday trading, though trading in London was lower.

Money and oil: The dollar was lower versus all major international currencies.

Crude oil for February delivery eased 37 cents to $82.29 a barrel. Oil continued to retreat from the 14-month high it achieved earlier in the week after 10 straight days of gains. It closed at $83.18 Wednesday, the highest settlement since Oct. 9, 2008 and a gain of nearly 15% from Dec. 21, when it settled at $72.47.

Gold for February delivery fell $2.50 to $1,131.10 an ounce, pulling off its earlier lows.