Market Review: February 1-5, 2010
A beat-up stock market recovered from a sharp drop in late trading on Friday, February 5, but still posted its fourth weekly drop.
The Dow Jones Industrials, down 167 points in afternoon trading, fought back to finish with a gain of 10 and barely close over 10,000. The Dow rose 10.05, or 0.1%, to 10,012.23 after being down as much as 167 points. For the week, the Dow lost 0.5%.
However, more stocks fell than rose on the New York Stock Exchange as investors pondered another series of troubling signals about the global economy.
Investors are concerned that European governments will have trouble getting their massive deficits under control. The Labor Department, meanwhile, offered scant hope of improvement in the jobs market in its closely watched monthly report.
The Federal Reserve also said during afternoon trading that consumers borrowed less for an 11th straight month in December. The drop of $1.8 billion was less than the decline of $9 billion analysts had expected. That fueled hopes that consumer spending will increase.
The broader Standard & Poor’s 500 index rose 3.08, or 0.3%, to 1,066.19 and ended down 0.7% for the week. The S&P 500 index hasn’t fallen four straight weeks since March 2009.
The U.S. unemployment rate unexpectedly fell in January to 9.7% from 10%, the government reported, even though analysts expected an uptick.
Timothy Speiss, head of Eisner LLP’s Personal Wealth Advisors group, said the improving unemployment rate was a good sign, but investors are well aware of the problems in the economy that have stocks falling in recent weeks.
The jobs report came as more troubling news emerged in Europe that Portugal and other weak economies were falling behind in efforts to control their deficits.
The late-day turnaround may have been the result of a defensive move by short sellers. It appeared that there was a little bit of a short squeeze. It was also speculated that many investors dumped risky assets heading into the weekend on worries about the global economy, including growing fears of a debt crisis in Europe.
The Labor Department revised some of its previous monthly employment statistics lower, but analysts said there were some encouraging signs. The number of hours worked and hourly pay both improved, as did the number of employers adding temporary workers. The hiring of temporary employees usually precedes companies adding permanent jobs.
