Labour Department news lowers Dow

Wall Street ended a record-breaking week quietly today, edging lower after the Labour Department said US employers added far fewer jobs than expected last month. The major indexes all scored big gains for the week.

While the jobs report gave investors further confirmation that the economy is slowing – employers created just 51,000 new jobs last month, well off the 120,000 Wall Street expected – the market is now concerned that the economy might be moderating too much.

Even the prospects of a rate cut by the Federal Reserve came as little comfort today.

“We’ve had a market that wants to see bad news as good news with respect to the Fed,” said Bryan Piskorowski, a market analyst at Wachovia Securities LLC.

“(Now the) economy is slowing, the housing market is slowing, consumer spending is starting to slow. You run that tightwire where bad news eventually becomes bad news.”

The hopes for a Fed rate cut as wall as a further decline in oil prices helped drive the 30-stock Dow Jones industrial average to three straight record high closes this week. The blue chips also set new intraday highs. Broader indexes also showed robust gains, though remained well below their all-time highs.

The Dow Jones industrial average closed down 16.48, or 0.14%, at 11,850.21 today, below the record close of 11,866.69 set the day before.

Broader stock indicators also fell today. The Standard & Poor’s 500 index was down 3.64, or 0.26%, at 1,349.58, and the Nasdaq composite index fell 6.35, or 0.28%, to close at 2,299.99.

For the week, the S&P gained 1.03%, while the Nasdaq gained 1.84%.

Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.70% from 4.61% late on Thursday. The dollar was mixed against other major currencies, while gold prices rose.

Light sweet crude settled down 27 cents at 59.76 a barrel on the New York Mercantile Exchange.

Investors are still paying close attention to oil prices, as their decline has helped drive the market’s upward rise in recent months. Crude prices are down sharply from their trading high for the year of $78.40 a barrel, which came in July.

Kevin Logan, chief US economist at Dresdner Kleinwort, said stocks rose this week as investors found encouragement in falling oil prices.

“It lessens inflation pressure and lowers the possibility that the Fed would have to raise rates,” he said.

GM was down 2.08, or 6.28%, at 31.05 after Jerome York resigned from the vehicle manufacturer’s board following the company’s failure to form an alliance with Japan’s Nissan Motor and France’s Renault.

York has been an ally with dissident shareholder Kirk Kerkorian, whose Tracinda Corp has a 9.9% stake in GM. Kerkorian has been agitating for change at the troubled company.

In other corporate news, business software maker WebMethods closed down 81 cents, or 10.8%, at 6.67 after it said it would not meet its second-quarter sales forecasts. The company said its sales force faced difficulty closing deals despite ample orders.

Crown Castle International, which builds signal towers for mobile phones, declined 1.65, or 4.75%, to 33.10 after agreeing to acquire rival Global Signal for 4 billion in cash and stock. Including debt, the deal is valued at $5.8bn (€4.6bn). Global Signal jumped 3.84, or 7.66%, to 53.94.

Chattem rose 9.77, or 28.4%, to 44.20 after it agreed to buy five over-the-counter products, including mouthwash and a sleep aid, from Johnson & Johnson and Pfizer.

The Russell 2000 index of smaller companies was down 3.27, or 0.44%, at 739.81.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume totalled 1.57 billion shares, compared with 1.73 billion traded on Thursday.