US stocks dip despite rosy jobless rate data

US stocks and the dollar fell on Friday despite a surprising report that the unemployment rate dropped as the economy in October created more than double the number of jobs economists had expected.

Treasury prices slipped, but losses were modest considering the robust jobs report.

Oil prices jumped as the upbeat data signaled a boost in demand. Gold prices also rose.

The number of workers on US payrolls outside the farm sector soared by 126,000 in October, the largest rise since January, far exceeding forecasts for a 58,000 gain. The unemployment rate fell to 6.0 percent, the lowest since April, from 6.1 percent in September, also surprising economists.

The Labor Department also made substantial upward revisions to payrolls for August and September, a sign that the third quarter's sizzling economic growth had translated into more jobs.

Stock prices surged after the reports, but gave back those gains and closed lower. Analysts said some investors worried that Wall Street's rally since March may have already priced in the improvement in the job market.

"It was a fairly muted response to the jobs number ... there was anticipation that the number was going to be good anyway," said John O'Donoghue, managing director of listed trading at Credit Suisse First Boston. "Everybody thought we'd be off to the races, but in essence, we've priced in a lot of the expectations already."

The blue-chip Dow Jones Industrial Average fell 47.18 points, or 0.48 percent, to 9,809.79. The broad Standard & Poor's 500 Index dipped 4.84 points, or 0.46 percent, to 1,053.21. Early in the session, both market gauges hit their highest levels since June 3, 2002.

The technology-heavy NASDAQ Composite Index slipped 5.63 points, or 0.28 percent, to 1,970.74. Earlier, it hit a high of 1,992.27, a level not seen since Jan. 15, 2002.

For the week, the NASDAQ rose 1.99 percent, while the Dow edged up 0.09 percent and the S&P 500 inched up 0.24 percent.

Nvidia Corp surged US$3.58, or 19.7 percent, to US$21.75. The graphics chip designer on thursday posted a quarterly profit versus a year-earlier loss as revenue surged a surprising 13 percent. The company said current-quarter sales would beat Wall Street estimates.

Altria Group Inc jumped US$2.21, or 4.7 percent, to US$49.51 and ranked as the Dow's biggest percentage gainer. Merrill Lynch said it added the tobacco company to its "focus list" of recommended stocks.

The dollar also surged immediately after the payrolls report, then retreated and closed lower.

US Treasury prices plunged after the payrolls report, but then regained some ground, making losses modest at the end of the day. Analysts said many investors were short of Treasuries, having sold bonds they did not have in anticipation of just such a fall in prices. Some took profits by buying the bonds back, limiting the market's overall drop.

The 10-year note slid 9/32 to 98 and 14/32, driving its yield up to 4.45 percent from 4.41 percent late Thursday. At one point, they hit a nine-week peak of 4.49 percent.

The price of the 30-year bond shed 9/32 to 101 and 18/32, pushing its yield up to 5.27 percent from 5.25 percent. The two-year note fell 3/32 to 99 and 08/32, bringing its yield up to 2.02 percent from 1.98 percent.

Gold fell at the open as the dollar surged on the jobs figures. But December gold ended up US$2.70 at US$383.40 an ounce.