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Market Recap: Europe Dampens Euphoria Over "Lower" Unemployment Rate

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Markets closed mixed on Wall Street today:

  • Dow -0.01 percent
  • S&P -0.02 percent
  • Nasdaq +0.03 percent
  • Oil +0.81 percent
  • Gold +0.56 percent

On the commodities front:

  • Oil (NYSE:USO) climbed to $101.01 a barrel
  • Gold (NYSE:GLD) up to $1,749.50 an ounce
  • Silver (NYSE:SLV) fell 0.49 percent to settle at $32.60

(Related: Sarkozy Calls for New Treaty to Unify Euro Zone)

Today’s markets were mixed because:

1) Unemployment Rate: The mood on Wall Street was positive after the Labor Department said the U.S. unemployment rate had eased to 8.6 percent in November as employers added 120,000 new jobs, making last month’s unemployment rate the lowest since March 2009.

However, the 8.6 percent figure is no reason to celebrate. It is only that low because of the number of people dropping out of the workforce and temporary holiday hiring. These two figures skew the data in favor of a “low” unemployment rate.

But despite this, it appears that investors were still satisfied with the meager pickup in hiring, and markets opened sharply higher Friday morning, with all three of the major indices topping 1 percent in early trading.

2) Europe: News out of Europe dampened that early euphoria, putting investors on edge and leading to sharp declines off the morning’s highs. Talk of a possible downgrade to Spain’s credit rating spooked investors and sent the Spanish 10-year yield up to 5.7 percent. Also, reports that Republicans would try to block any move by the European Central Bank to lend funds to the International Monetary Fund to aid Europe’s cash-strapped countries further worried investors who have become disillusioned with the government and partisan politics. Conservative lawmakers are against the Washington-based IMF’s involvement because it could leave U.S. taxpayers footing the bill.

3) Banks: Bank stocks were among the top gainers today, with Bank of America and JPMorgan leading the Dow’s early advance. Morgan Stanley, Goldman Sachs, and Citigroup shares all closed the day sharply higher despite the market’s general decline in the afternoon.

[Editor’s note: portions of the above were originally published on Wall St. Cheat Sheet.]

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