Tallahassee Journal

Dow sheds 171, stocks in the red again for ’15

Dow sheds 171, stocks in the red again for ’15

Stocks got an early-morning lift Friday from a better-than-expected December reading on the labor market but reversed course and ended sharply lower as investors refocused on weakness in the eurozone and some of the not-so pretty details in the jobs report.stock_market_01

The “zig-zag” price action eerily resembled the wild, day-to-day price swings the market has experienced in the start of 2015, and is something that investors need to get accustomed to as Wall Street weighs the ongoing tug-of-war between stronger U.S. growth and subpar growth abroad, said Kate Warne, investment strategist at Edward Jones.

“Investors should become accustomed to the volatility as the first few days of the year have foreshadowed (what we will likely see) for rest of year” says Warne. After stock futures moved up on the jobs news, stocks turned lower after the 9:30 a.m. ET opening, an hour after the data came out. The Dow Jones industrial average closed down 170.5 points, or 1%; the S&P 500 and Nasdaq composite lost 0.8% and 0.7%, respectively. All three benchmarks are in the red again for 2015, after each had topped their 2014 closes only the day before.

The volatile price action also came amid a massive and now-concluded manhunt for terror suspects in Paris that played out on TV. The Dow, of course, has taken investors on a wild ride this week, plunging 461 points Monday and Tuesday before mounting a full rebound of 536 points Wednesday and Thursday.

The market volatility has come in waves as investors around the globe digest the good and bad parts of the U.S. employment report and react to more disappointing manufacturing data out of Germany and France, as well as fears that the European Central Bank won’t deliver as aggressive a stimulus plan as expected later this month to jumpstart growth in the eurozone and combat dangerously low inflation. Rumors are circulating that the ECB will launch a bond-buying program of 500 billion euros, a jolt of potential stimulus that underwhelmed global investors who were expecting larger asset purchases.

The government reported that 252,000 jobs were created last month, topping expectations. The prior two months of job gains were revised up 50,000. The nation’s unemployment rate fell more than expected to 5.6% from 5.8% in November. Those upbeat numbers were offset, however, by a 0.2% drop in average hourly wages, which fell short of the +0.2% wage gain expected. However, the lack of wage pressure was viewed bullishly by many investors, as it suggests little wage inflation is on the horizon which gives the Federal Reserve another reason to hold off on interest rate hikes later this year.