Well, it could have been worse. After lackluster employment reports on Wednesday and Thursday, the alarm bells sounded even louder this morning, when the Department of Labor reported that just 88,000 jobs were added in March. Still, the Dow Jones Industrial Average bounced back from an early 170-point loss to finish down just 41 points, or 0.3%, as many investors seemed to see the sell-off as a buying opportunity. It was the worst week of the year for the S&P 500 and Nasdaq, and for the Dow, its worst week since February, though it only fell 13 points.
The number of new jobs added was the lowest total since October, and comes after several months of strong job growth. In fact, the figures in January and February were revised upward by a total of 61,000, to 148,000 and 268,000. Economists are struggling to come up with an explanation for the sudden drop off, and have suggested that increases in the payroll tax and income taxes on the wealthy, as well as sequestration, have contributed to the weak labor market. Ninety-five thousand jobs were added in the private sector, while governments shed a net of 7,000 jobs, many of which were in the Postal Service. The unemployment rate dropped from 7.7%, to 7.6%, but the decrease was primarily the result of job seekers giving up on finding a job.
Cisco Systems was among the poorest performers on the Dow today, falling 2% after fellow network provider F5 Networks reported disappointing preliminary earnings, and fell 19% as a result. F5 missed its own revenue guidance by 7%, and also reported lower-than-expected earnings per share, while Radware, another industry peer, also reported poor preliminary results. For more information, see my colleague Evan Niu's coverage here.
American Express was the worst performer on the Dow, falling 2.1%, as the weak employment growth likely hurts the credit-card issuer more than most companies. The Jefferies Group also voiced some concerns about the lender heading into earnings season, and gave it a price target 10% below its current value. Total consumer borrowings jumped from $12.7 billion in January, to $18.1 billion to February, a trend that should favor the lender.
Meanwhile, Boeing bucked the overall trend, rising 1.4% after reporting a successful test flight of its troubled Dreamliner 787 jet, which had been grounded due to battery fires. The aircraft-maker now says testing has been completed, which leaves that 787 in the hands of regulators who originally ordered the composite jet grounded.
After a subpar week, investors can look forward to the beginning of earnings season, which could reverse the downward trend caused by poor employment numbers. Alcoawill be the first Dow stock to report earnings, releasing on Monday after hours. Analysts are expecting an EPS of $0.08 from the aluminum maker, which has been among the poorer performers on the blue chips so far this year.
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