US stocks entered the second quarter in a glum mood, closing a holiday-shortened week on Thursday with minor losses as Europe’s financial woes hung over positive US economic data.
“US stocks finished the day mixed, ending a rough week for the equity markets,” analysts at Charles Schwab & Co said.
“Traders appeared unwilling to leave risk on the table heading into the long weekend, especially as debt concerns in the eurozone continued to swirl today, and as the jobs report will be released tomorrow,” they said.
The blue-chip Dow Jones Industrial Average closed on Thursday at 13,060.14 points, slipping a fractional 0.01 percent over the week since the previous Friday.
The S&P 500 also shed 0.01 percent to finish at 1,398.08.
Proving a bit more resilient, the tech-rich NASDAQ was essentially flat at 3,080.50.
“The news on the domestic economy, especially on employment, has been good enough that the Federal Reserve has indicated that it is less likely to launch any more quantitative easing [QE],” said Nigel Gault, chief US economist at IHS Global Insight.
“Although financial markets do not like that message, it is good news since it implies that the Fed thinks the economy is healthy enough to keep improving without emergency assistance,” he said.
Most analysts expected the US Labor Department would report on Friday that unemployment remained stuck at 8.3 percent for the third month in a row. The final figures showed a slight drop to 8.2 percent last month, the lowest rate in more than three years.
Despite the positive headline number, the Labor Department said the number of unemployed workers hovered close to 13 million and hiring slowed, a warning sign that the recovery may be in trouble.
Still, after months of a bull run, analysts said a correction seemed in store.
“‘Buy on the rumor, sell on the news,’ that slogan seems to explain the selloff in stock prices,” Ed Yardeni of Yardeni Reseach said on Thursday.
Europe inspired nail-biting, as Spain, and even France, were forced to pay more to borrow amid fears the eurozone debt crisis is deepening.
“The potential for a flare-up of sovereign debt concerns in the eurozone — and specifically Spain — is the real bugaboo weighing on the psyche of equity market participants,” Patrick O’Hare at Briefing.com said.
“These thoughts have a way of festering just ahead of an earnings reporting period that is expected to show a deceleration in earnings growth,” he added.
Analysts at 24/7WallSt.com noted “some growing caution” about company expectations “on the heels of a massive rally where the DJIA [Dow Jones] rose 8.1 percent and the S&P 500 rose 11.9 percent in the first quarter alone.”