By Anora Mahmudova and Victor Reklaitis, MarketWatch
Greece worries offset stellar jobs report
NEW YORK (MarketWatch) -- U.S. stocks finished lower Friday as
investors shrugged off a strong jobs report, which had provided a
lift earlier in the day, and turned to fresh concerns about
Greece.
The worries were sparked midday Friday after Standard &
Poor's downgraded the country's long-term sovereign-debt rating to
B-minus from B. In addition, a euro zone official said Greece faces
a Feb. 16 deadline to apply for an extension of its bailout
program.
The main indexes still booked solid weekly gains, however.
The S&P 500 (SPX) fell 7.05 points, or 0.3%, to close at
2,055.47 on Friday, according to preliminary FactSet data. That
left the benchmark up 3% for the week, representing its largest
weekly gain since mid-December, though it's down 0.2% for the
year.
The Dow Jones Industrial Average (DJI) dropped 60.59 points, or
0.3%, to close at 17,824.29 on Friday. That put the blue-chip
barometer up 3.8% for the week -- its biggest weekly percentage
gain since January 2013 -- and essentially flat for the year.
The Nasdaq Composite (RIXF) slid 20.70 points, or 0.4%, to end
at 4,744.40. The tech-heavy index added 2.4% for the week, and it's
up 0.2% in 2015 to date.
JJ Kinahan, chief derivatives strategist at TD Ameritrade, said
that Friday's reversal in prices fit with a trend of taking risk
off the table on Friday afternoons.
"We've had good rallies this week, and investors simply do not
want to hold long positions going into the weekend. And news of
Greece became a good trigger point to start selling," he added.
Brian Fenske, head of sales trading at ITG, a New York-based
brokerage firm, said the downgrade of Greece caught traders
off-guard.
"People have been ignoring negative news about Greece this week,
and today's downgrade is a delayed reaction that further problems
with Green can destabilize the euro," Fenske said.
"There is also concern that the market is toppy. A lot of
fundamental investors are afraid to buy stocks when earnings
estimates have come down," Fenske added.
The main focus earlier was on the key monthly jobs report, which
came in far stronger than expected.
The Labor Department report showed that the economy added
257,000 jobs in January, while November and December numbers were
revised sharply higher. In another good sign, hourly wages jumped
0.5%. Although the unemployment rate ticked up to 5.7% from 5.6%,
it suggests that more people are entering the workforce. The U.S.
economy has added more than 200,000 jobs for 12 straight
months.
The strong jobs report has boosted expectations around the Fed's
rate hikes, and higher rates could peel some investors away from
stocks.
Speaking in Florida, Atlanta Federal Reserve President Dennis
Lockhart said the central bank could hike short-term interest rates
anytime "from June on." Jon Hilsenrath, chief economics
correspondent for The Wall Street Journal, wrote that the strong
jobs report keeps open the possibility the Federal Reserve could
start raising short-term interest rates in June.
Steven Wieting, global chief investment strategist at Citi
Private Bank, said consistently higher job gains do not justify
rates at zero.
"We have now had four years of 200,000 job gains on average and
the latest trend suggest we have capacity to grow to absorb
population growth. Zero interest rates are not appropriate at this
juncture," Wieting said.
"While impending rate hikes, and we believe the Fed will raise
rates this year, bring volatility to the stock market, ultimately,
earnings growth and increased consumer spending will drive markets
higher. The continued strength of the dollar will make U.S.
equities attractive to international investors, bringing in
investments," he added.
Check out: 4 reasons stocks aren't soaring after that stellar
jobs report
Friday earnings: Shares in Moody's Corp. (MCO) closed up 5.1%
after the company reported fourth-quarter earnings of $1.12 a
share, beating a consensus estimate gathered from a FactSet
survey.
Madison Square Garden Co.(MSGNV) gained 2.2% after beating on
fourth-quarter earnings.
CBOE Holdings Inc. (CBOE) dropped 4.1% as it reported earnings
slightly lower than expectations.
Movers and shakers: Twitter Inc. (TWTR) surged 16.4% after the
social-media company reported adjusted fourth-quarter earnings
ahead of analyst expectations.
LinkedIn Corp. (LNKD) jumped 10.7%, after the social-networking
company beat expectations for the fourth quarter.
GoPro Inc. (GPRO), on the other hand, slumped 13.3% after the
maker of wearable video cameras posted results that easily beat
expectations late Thursday, but then warned on the coming quarter
and that its chief operating officer had resigned.
Pandora Media Inc. (P) sank 17.2% after the music-streaming
service late Thursday reported fourth-quarter results where revenue
and the 2015 outlook missed expectations.
Online travel-services provider Expedia Inc. (EXPE) reported a
drop in fourth-quarter earnings late Thursday, sending the shares
11.5% lower.
Harris Corp. (HRS) and Exelis Inc. (XLS) said they have entered
into a definitive agreement, where Harris will buy the aerospace
and defense firm in a cash-and-stock deal valued at $23.75 per
share, or an approximately $4.75 billion enterprise value. Shares
of Exelis soared 36% and Harris jumped 9.6%.
(Read more in Friday's Movers & Shakers column
http://www.marketwatch.com/story/moodys-madison-square-garden-cboe-earnings-in-focus-2015-02-06.)
Other markets: In the wake of the jobs report, the dollar
rallied, with a key index for the buck (DXY) jumping 1%, while the
10-year Treasury yield rose 13 basis points to nearly 1.95%.
Oil futures continued to climb, handing the March crude contract
(CLH5) a 7% weekly advance.
Europe's benchmark stock index extended gains into a fifth
straight day on Friday, after erasing losses in volatile afternoon
action on the back of stronger-than-expected U.S. jobs numbers. The
Stoxx Europe 600 ended 0.2% higher at 373.31. Asian markets closed
mixed.
Read: Greece and Germany can't even agree to disagree
MarketWatch's Sara Sjolin in London contributed to this
report.
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