Stocks closed broadly lower Friday, hurt by a disappointing reading on job creation and a state court ruling that slammed banks' foreclosure practices.
The Dow Jones Industrial Average ($INDU) fell 23points, or 0.2%, to finish at 11,675. Financial stocks J.P. Morgan Chase (JPM), Bank of America (BAC), American Express (AXP) and Travelers (TRV) weighed on the blue-chip index after the Massachusetts Supreme Judicial Court affirmed the fundamental and long-established idea that a bank must own the mortgage it's foreclosing on before it forecloses.
Because both Wells Fargo (WFC) and US Bancorp (USB) could not prove they owned the mortgages when they foreclosed on two homes, the court held that the foreclosures did not give the banks clear title to the properties.
The latest development in the foreclosure scandal led to a sell-off in the financial sector, which led the broader market lower. The S&P 500 ($INX) closed down 2 points, or 0.2%, at 1,272. The tech-heavy Nasdaq Composite ($COMPX) lost 7 points, or 0.3%, to finish at 2,703.
Jobs Growth Still Sluggish
Stocks started the day on a down note after December's employment report came in short of Wall Street's expectations. Nonfarm payrolls rose by 103,000 last month with the private sector adding 113,000 jobs and the government slashing 10,000 jobs, the Labor Department said. Economists were looking for 150,000 jobs to be created last month.
Expectations for the government's monthly employment situation report were running especially high after Wednesday's data from payroll processor ADP (ADP) showing a record 297,000 private jobs added last month, nearly triple Wall Street's forecast. And although the Labor Department's headline unemployment rate dropped to 9.4% from 9.7%, that was largely attributable to people giving up on trying to find a job.
Employment data dominated traders' thoughts all week, says Kenny Polcari, managing director at interdealer broker ICAP Corporates, and when Friday's figures finally came in they were something of a wash.
"The ADP number ignited some excitement coming into Friday, and that caused a number of analysts to raise their numbers," Polcari says. "So when it came in at 103,000, that was a bit of a letdown. But the November number was revised up, so the market kind of marked time."
For more on Polcari's take from the floor of the New York Stock Exchange (NYX), see the video above.