Oil prices retreated today and the jobless rate in August dropped to the lowest level in four months, but stocks slipped as investors realized that Hurricane Katrina makes last month's jobs numbers irrelevant.
Driving the unemployment rate down to 4.9 percent, the economy added 169,000 new jobs in August, the government reported.
But Katrina will displace as many as a million workers, driving the jobless rate right back up, warned Allan Hubbard, director of the White House's National Economic Council.
In the New Orleans area, where the unemployment rate was roughly the national average, it will spike to 20 or 25 percent next month, economists predicted.
That will be enough to push the nation's jobless rate back up and slow economic growth over the next few months.
Hubbard cited a slowdown of about half a percentage point, but three Wall Street economists who updated their forecasts today pegged the loss at from three quarters to a full percentage point. Their forecasts are that the economy will grow by 3 to 3.8 percent this quarter.
Slower growth is rarely good for the stock market, and the retreat in energy prices seen today will take a long time to filter down to the price at the pump.
Crude oil dropped about $1.90 a barrel and gasoline futures fell by 23 cents a gallon in response to coming improvement in supplies.
The International Energy Agency agreed to tap Europe's stockpiles to help the United States. Power was restored to several of the closed Gulf Coast refineries. Louisiana's offshore oil port reopened. The pipelines linking the Gulf Coast to the Northeast began to flow again.
But it takes almost three weeks for oil to flow from Louisiana to Washington and two weeks for a supertanker to plow across the Atlantic, so no immediate relief is in sight.
The oil market does seem to have peaked, however, and stocks climbed as each new piece of the supply picture was reported.
But when a three-day holiday weekend is coming up, traders are always cautious, so they cut back their holdings late in the day, giving the familiar indexes small losses.
The Dow Jones industrial average closed off 12 points at 10,447.37. The Standard & Poor's 500 stock index dropped almost four points to 1,218.02. The Nasdaq Stock Market composite index fell seven points to 2,141.07.
For the week, all three indexes were slightly higher.
The Dow gained 50 points, the S&P 13 points, the Nasdaq composite 20 points.