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Posted at 11:59 a.m., Friday, December 5, 2003

Stocks retreat over slow U.S. job growth

Hawai'i Stocks
Updated Market Chart

Associated Press

NEW YORK ó Stocks retreated today after a report on November employment revealed disappointing job growth and Intel Corp. issued a forecast that fell short of expectations. The marketís major indexes closed the week mixed, with the Nasdaq composite index down after briefly touching the 2,000 level on Wednesday.

While the government announced the creation of 57,000 new jobs last month, that was well off the 150,000 Wall Street expected. And Intel, while predicting revenue growth, wasnít as upbeat as investors had hoped. "Thereís significant anticipation for recovery in technology, and itís already an expensive sector of the market," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons in St. Louis.

According to preliminary calculations, the Dow Jones industrial average closed down 68.14, or 0.7 percent, at 9,862.68, wiping out yesterdayís 57-point gain.

Broader stock indicators also fell, led by the technology group. The Standard & Poorís 500 index was down 8.22, or 0.8 percent, at 1,061.50; the Nasdaq composite index was down 30.98, or 1.6 percent, at 1,937.82; and the Russell 2000 index of smaller companies was down 5.14, or 0.9 percent, at 539.01.

The Labor Department reported that the nationís unemployment rate slipped to 5.9 percent in November, the lowest level in eight months. But investors focused on a negative part of the report, job growth.

Economists worry that U.S. companies, to keep operating costs low, are producing more overseas where salaries are lower rather in the states. Without growth in jobs and salaries here, there are fears that consumer spending may sputter, undermining the recovery.

The downbeat reading on employment blunted the optimism that yesterday led the Dow to its highest level in 18 months. For the week, the three main gauges finished mixed, with the Dow up 0.8 percent, the Nasdaq down 1.1 percent, and the S&P 500 up 0.3 percent.

"We need 150,000 jobs per month just to maintain unemployment at the current level and to keep up with the population entering the work force, and we havenít seen that amount of growth in more than two and a half years," said Lawrence Mishel, president of the Economic Policy Institute, a Washington-based think tank.

Notably, the employment report showed that job losses at U.S. factories continued for the 39th consecutive month in November, with payrolls falling by 17,000. But the pace has slowed, and in a sign of possibly better days ahead for manufacturing, the Commerce Department said today that new orders to U.S. factories rose by 2.2 percent in October, the strongest increase in 15 months and the fifth in the past six months.

Intel warned investors late yesterday it will take a $600 million charge after one of its wireless businesses failed to meet expectations. The companyís shares fell $1.44 to $32.10.

Declining issues outnumbered advancers by a 3-to-2 ratio on the New York Stock Exchange.