By Donna Kardos Yesalavich
NEW YORK (Dow Jones) -- U.S. stocks erased early gains Friday as
the tech sector lagged, while data showed the U.S. jobless rate
edged down to 9.5% in June, but the economy shed jobs for the first
time this year.
The Dow Jones Industrial Average (DJI) rose 4.5 points to 9,767.
Verizon (VZ) led the measure's gains with a 2.5% jump. Alcoa (AA)
was also strong, up 0.9%, and J.P. Morgan Chase(JPM) added
0.8%.
Keeping the gains in check, Intel fell 0.5%, Wal-Mart Stores
(WMT) slipped 0.4% and Merck (MRK) dropped 0.3%.
The Nasdaq Composite (RIXF) fell 1% to 2,100. The Standard &
Poor's 500 (SPX) advanced 1.1% to 1,028, led by its health-care and
materials sectors.
Boosting the health-care sector, drug-making giant Eli Lilly
(LLY) said it will buy closely held Alnara Pharmaceuticals Inc., a
company focused on developing treatments for metabolic
diseases.
The climb in materials stocks came as the Australian
government's planned new mining tax included major concessions to
the mining industry, including a reduction in the headline rate of
tax to 30% from 40%. The government also excluded all commodities
from the tax apart from iron ore and coal. Freeport-McMoRan Copper
& Gold (FCX) jumped 2.1%, Titanium Metals (TIE) advanced 1.9%
and Owens-Illinois (OI) climbed 0.9%.
Friday morning, the government's monthly jobs data sent mixed
messages on the labor market. The jobless rate edged down to 9.5%
in June from 9.7% the previous month, better than the increase to
9.8% economists were expected. However, nonfarm payrolls fell by
125,000 last month, with only 83,000 private-sector jobs added.
Economists were expecting payrolls to drop by a more modest 110,000
in June.
"It was not good, but it wasn't as bad as people may have
feared," said Ed Crotty, chief investment officer at Davidson
Investment Advisors. He noted that after a report on private-sector
jobs from Automatic Data Processing disappointed earlier in the
week, "that really fanned a lot of fears that we could see a bad
number."
Still, Crotty said the 83,000 private-sector jobs added last
month is not sufficient to keep up with population growth. He was
also concerned with a drop in the number of hours worked as well as
a decline in average hourly earnings.
"That shows job momentum is definitely in the negative
direction," he said. Regarding the decline in the unemployment
rate, Crotty said it appeared to be skewed because in June, the
civilian labor force participation rate fell by 0.3 percentage
point to 64.7%.
"In the near term a lot of times people fall out of the equation
and can create an unemployment rate that looks positive though
we're not seeing a lot of job creation," Crotty said.
The dollar strengthened against the yen but was weaker against
the euro, which was recently trading around $1.2603, up from
$1.2515 late Thursday in New York. The U.S. Dollar Index, which
tracks the U.S. currency against a basket of six others, fell 0.6%.
Treasurys fell, pushing the yield on the 10-year note up to
2.97%.
Crude-oil futures rose above $73 a barrel. Gold futures also
climbed.
Overseas, Germany's lower house of Parliament on Friday approved
a watered-down bill banning "naked" short-selling of all stocks and
euro currency derivatives not intended for hedging against currency
risks. The bill extends Germany's previous move to ban naked
short-selling of shares in 10 leading German financial institutions
and credit default swaps on euro-zone government bonds from May
19.
Still to come, data on factory orders will be released at 10
a.m. EDT.