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Wall Street shrugs off weak jobs data

Source : BUSINESS_STANDARD
Last Updated: Fri, Sep 07, 2012 19:24 hrs
The Standard and Poor's building in New York

Disappointing jobs growth was not enough to knock the benchmark S&P 500 off a four-year high on Friday, as the poor figures boosted optimism that the Federal Reserve will act to stimulate the economy next week.

The non-farm payrolls report showed job growth of only 96,000 last month. The weak payroll figures fell short of expectations for 125,000 new jobs, particularly after a slew of strong readings on the labour market on Thursday, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week. The jobs report showed the unemployment rate dropped to 8.1 per cent from 8.3 per cent in July, but it was largely due to Americans giving up the search for work.

"There are two main competing forces (in the market) right now. One is the fundamental state of the economy and the other is the belief in the power of central banks to keep risk asset prices afloat. This week is a very good demonstration of the tug of war that's going on," said Peter Cook, chief investment officer at Performance Trust Investment Advisors, LLC in Chicago.

In a market that has seen little volatility of late, the S&P 500 posted its strongest one-day percentage gain since June on Thursday, rising 2 per cent.

Intel Corp cut its third-quarter revenue estimate and withdrew its full-year forecast, saying demand for its chips declined as customers reduced inventory and businesses bought fewer personal computers. Shares of the world's largest chipmaker fell more than 3 per cent to $24.30.

The Dow Jones industrial average .DJI dropped 3.05 points, or 0.02 per cent, to 13,288.95. The Standard & Poor's 500 Index .SPX gained 3.54 points, or 0.25 per cent, to 1,435.66. The Nasdaq Composite Index .IXIC dropped 0.52 points, or 0.02 per cent, to 3,135.29.

Shares of Pandora Media Inc fell 18 per cent to $10.34 following media reports that Apple Inc was in talks to license music for a radio service like the one Pandora operates.

The Wall Street Journal, citing people familiar with the matter, reported that Apple wants to license music for a custom-radio service that would work on its hardware, such as the iPhone, iPads and Mac computers, in a bid to expand its dominance in online music. Apple's iTunes is the largest music retailer.

The jobs report showed the unemployment rate dropped to 8.1 per cent from 8.3 per cent in July, but it was largely due to Americans giving up the search for work


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