FOX Business: The Power to Prosper
Capping off a turbulent week of trading, U.S. stocks bounced well off their lows to more than halve the session’s losses on Friday, but the afternoon comeback effort wasn’t enough to prevent the bears from halting Wall Street’s five-week win streak amid renewed jitters over Europe's sovereign debt crisis.
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The Dow Jones Industrial Average fell 61.23 points, or 0.51%, to 11,983.24, the S&P 500 dipped 7.92 points, or 0.63%, to 1,253.23 and the Nasdaq Composite dropped 11.82 points, or 0.44%, to 2,686.15.
The latest worries about Europe appeared to center around leaders' inability to secure new bailout funding from G-20 members and uncertainty surrounding a confidence vote in Greece for beleaguered Prime Minister George Papandreou. At the same time, the markets have been paying increasing attention to Italy, which has seen its 10-year bond rates soar.
"Events continue to spiral beyond the control of European policy-makers. With so much time and effort being put into Greece, the troika now finds itself facing a much bigger problem: Italy," Win Thin, global head of emerging markets strategy at Brown Brothers Harriman, wrote in a note.
All of these developments seemed to overshadow new data on the U.S. jobs market that economists found somewhat encouraging.
Friday's seesaw action was fitting as headlines from Europe, where policymakers are struggling to stem the deepening sovereign debt crisis before it continues spreading to larger economies, have dominated Wall Street all week. The volatility sent the Dow plunging nearly 600 points in the first two sessions this week before it soared close to 400 points the next two.
For the week, the blue chips slumped 248 points, giving back a chunk of the gains from October, which marked Wall Street's strongest monthly performance since 2002.
The markets had been hoping for more progress out of a euro-zone summit earlier this week and then the G-20 meeting on Friday. Trader anxiety was heightened when German Chancellor Angela Merkel said hardly any G-20 countries have agreed to participate in the region's bailout fund. Echoing those comments, U.K. Prime Minister David Cameron said the country won't fund the euro zone's bailout directly or through the International Monetary Fund.
The group, which represents many of the world's most influential economic players, also failed to strike an agreement on how to set up the IMF to respond to the debt crisis, which some market participants saw as yet another setback.
The G-20's response to Europe's debt crisis "sorely lacks detail," according to Karen Ward, HSBC's global senior economist, adding that little has changed since European leaders forged a general plan to stem the crisis late last week.
Additionally, Greece's Papandreou faces a confidence vote Friday evening after his plans to hold a national referendum on the country's much needed bailout ignited fury across the globe, and quashed credibility in his government.
Even while Greece struggles to avoid a crippling default, the markets have expressed concern over Italy, which is grappling with its own debt mess. The yield on the 10-year note is quickly approaching the dangerous 7% level.
Meanwhile, some attention shifted back to the U.S. economy. The all-important government jobs report showed employers added 80,000 jobs last month, pushing the unemployment rate down to 9%, according to a closely-watched report from the Labor Department. Economists had expected the economy to add 95,000 jobs, while the unemployment rate was seen holding steady at 9.1%. The private sector added 104,000 jobs, while the government shed 24,000.
Crucially, there were also significant upward revisions to the job growth figures for both August and September. According to a calculation by economists at BTIG, a global trading firm, the increase for prior months effectively pushes October's increase to 102,000, which would be well above the consensus forecast.
The Federal Reserve has kept short term interest rates at historical lows, and crafted unconventional easing programs, in a bid to jumpstart hiring, but the labor market has remained weak since the financial crisis in 2008. Indeed, the jobless rate is only 10.1 percentage points lower than its recent 2009 peak, and well higher than levels that are considered to be the so-called "natural" level of unemployment.
On the corporate front, Groupon (NASDAQ:GRPN) made its debut on the Nasdaq Stock Market on Friday. The local deals company saw its shares zoom as much as 50% higher as it became the largest U.S. Internet IPO since Google (NASDAQ:GOOG) in 2004.
The euro fell 0.17% to $1.378, while European blue chips dropped 2.5%. Yields on U.S. government debt fell as traders left equity markets. The 10-year Treasury note yields 2.052% from 2.079%.
Energy markets were higher in choppy trade. Capping off its fifth-straight weekly gain, the benchmark American crude oil contract rose 19 cents, or 0.2%, to $94.26 a barrel. Wholesale RBOB gasoline gained 2 cents, or 0.82%, to $2.66 a gallon. Gold fell $9.00, or 0.51%, to $1,756.
European blue chips dropped 2.5%, the English FTSE 100 fell 0.49% to 5,518 and the German DAX slid 2.8% to 5,964.
In Asia, the Japanese Nikkei 225 rallied 1.9% to 8,801 and the Chinese Hang Seng soared 3.1% to 19,843.