NEW YORK -- U.S. stocks slipped Friday, failing to hold on to early gains as a declining appetite for risk and concerns about the subprime mortgage market offset optimism about data showing steady job growth.
Stocks initially soared after the government reported February job growth was nearly in line with expectations and gave upward revisions of job growth figures from earlier months, easing worries about an economic slowdown.
But indexes were knocked lower as investors feared that a fallout from the subprime market amid a slowing housing sector could hurt consumer spending as banks tighten lending.
New Century Financial Corp , a lender that offers mortgages to people with poor credit histories, said it had stopped accepting new loans and analysts said they expect the company may seek bankruptcy protection soon.
"It's the end of the week and we've had an extremely volatile week," said Ned Riley, chief executive and chief investment officer of Riley Asset Management in Boston. "Hedge funds are trying to capitalize on the weakness that's developed in the subprime market ... they are high-risk securities, and when you buy them, unfortunately, the downside is sometimes a quick exit."
Story Continues Below
The Dow Jones industrial average was down 5.77 points, or 0.05 percent, at 12,254.93. The Standard & Poor's 500 Index was down 1.57 points, or 0.11 percent, at 1,400.32. The Nasdaq Composite Index was down 5.81 points, or 0.24 percent, at 2,381.92.
Stocks have been volatile since a sell-off in global equities last week wiped out about $2 trillion in investor assets amid a diminishing appetite for risky assets. However, major U.S. indexes were on track to finish the week with modest gains.
New Century shares dropped 15 percent to $3.29 on the New York Stock Exchange. The stock has fallen nearly 80 percent in the past week.
The data showing February nonfarm payrolls added 97,000 jobs was close to economists' forecasts and gave stock investors a reason to feel more optimistic after days of heavy selling in global equities markets amid a diminishing appetite for risk.
Stocks that advanced included shares of aluminum maker Alcoa Inc. after analysts at J.P. Morgan Securities raised their 2007 earnings outlook on the company. [ID:nBNG285819] The stock rose 1.9 percent to $33.10. It was the top positive influence on the Dow and helped limit the blue-chip average's decline.
The Nasdaq was weighed down by shares of Yahoo Inc. after the Wall Street Journal reported AT&T was negotiating changes that could lead to a scaling back of its deal with the Internet company. [ID:nN08336119]
Yahoo shares were the top negative weight on the Nasdaq 100 , slipping 5.1 percent to $29.13.
AT&T shares dipped 0.1 percent to $36.46 on the NYSE.
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
Editor's note:
Best way to insure your investments from a 2007 market crash.
Big Gains as Stocks Go Up ... Or Down! -- Find Out How
This service made $125,427 on a $10,500 investment in 42 days!
