Any time the government releases figures suggesting that growth may be cooling, bonds tend to advance. "Bonds love weak economic numbers," said David Kotok, president of investment firm Cumberland Advisors Inc.
Despite the weak jobs number, some stock market analysts and traders took heart that the market did not suffer an even sharper sell-off. They said other data in the Labor Department report, including the length of the work week and hourly pay, were more positive. They also said a separate study of households indicated that 629,000 more workers found jobs in July.
A trader at the NYSE, at which decliners outnumbered advancers by 8 to 5.
(Henny Ray Abrams -- Reuters)
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Video: Washington Post staff writer Nell Henderson discusses the latest unemployment report.
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Bush Campaign: Gary Blank, economic adviser for the Bush-Cheney campaign, offered the GOP ticket's take on the latest economic data. (Aug. 6).
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Kerry Campaign: Jason Furman, economic adviser for the Kerry-Edwards campaign, gave the Democrats' take (Aug. 6).
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"I don't think we should go overboard here," said Laurence G. Kantor, head of economics and market strategy at Barclays Capital. "We seem to go through periods of two or three months where jobs look strong followed by a couple months where jobs look weak. And the household survey seems to be behaving the opposite way."
In a note to clients, RBC Dain Rauscher Inc. equity strategist Phil Dow said that when compared to earnings, stocks in the S&P 500 are beginning to look more attractive. He said stocks in the index now trade at about 17 times expected earnings for the rest of this year, close to the historic average of 16 times earnings.
Dow and others said big, dividend-paying companies with large amounts of cash on their balance sheets are likely to fare best. Firms with little or no profit, such as many technology firms, tend to suffer in a weak economic environment. That has been reflected in the Nasdaq's dismal performance this year.
Money continues to flow out of technology-focused mutual funds, according to brokerage firm Piper Jaffray & Co. A total of $114 million flowed out of technology stock funds in the week ended Aug. 4, the firm said, while $374 million went into taxable bond funds.
"What's propping the market up right now are the more defensive sectors . . . some consumer staples and drug companies," said Richard Bernstein, chief U.S. strategist for Merrill Lynch & Co. "We had a pretty defensive strategy going into" the job numbers announcement, Bernstein said. "And this just kind of played into our theme."
Golub of J.P. Morgan Fleming said he expects the market to be volatile for the next few weeks or months but won't go much higher or lower than the benchmarks already established this year.
"I don't think the market is going to fall apart but will probably just continue to stay in a trading range," he said. "On the one hand you've had really great earnings but on the other hand you have a lot of fear in the market about the upcoming election, interest rates, terrorism, oil prices and Iraq. . . . This [jobs] number just gave one more shot of worry."
Other Indicators
• The New York Stock Exchange composite index fell 69.27, to 6225.83; the American Stock Exchange index fell 3.19, to 1221.28; and the Russell 2000 index of smaller-company stocks fell 12.71, to 519.65.
• Declining issues outnumbered advancing ones by 8 to 5 on the NYSE, where trading volume rose to 1.51 billion shares, from 1.39 billion on Thursday. On the Nasdaq Stock Market, decliners outnumbered advancers by 11 to 3 and volume totaled 1.68 billion, up from 1.55 billion.
• The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 110.36 yen, down from 111.71 late Thursday, and a euro bought $1.2277, up from $1.2057.
