Job growth jumps higher, sends unemployment rate down
A record-breaking week for Wall Street ended Friday with even more gains thanks to a jobs report that showed the unemployment rate declined to a four-year low in February.
The Commerce Department's monthly jobs report showed that the U.S. economy added 236,000 jobs in February, dropping the unemployment rate from 7.9 percent to 7.7 percent. The total was nearly double January's revised figure of 119,000 and much higher than economists' predictions, which averaged 165,000, according to Bloomberg News.
"This was a lot higher than anyone was expecting, and it definitely shines light on the fact that the economy is improving," Owen Fitzpatrick, head of U.S. equities at Deutsche Bank Asset and Wealth Management, told Reuters.
The gains were broad-based, with construction adding 48,000 jobs, manufacturing jobs increasing 14,000, and retail gaining 23,700 jobs. The only sector to remain weak is government, which shed another 10,000 jobs, a lasting trend.
The hope among economists is that February was a turning point, the beginning of several months of such gains: The United States has to add 250,000 jobs or more per month to create substantial movement in the rate, they say.
"We had already moved from a slog to a jog and we are on course to really get rolling," Bill Cheney, chief economist at John Hancock Financial Services, told Reuters.
However, Cheney also gave voice to an underlying fear about the economy: "The risk here is, while the economy is gathering speed, the politicians are stepping on the brakes."
The president and Congress are at odds on severe budget cuts they put off in the "fiscal cliff" compromise, which began taking effect at the beginning of March. Many economists believe the cuts, if allowed to fully take effect, could hurt the recovering U.S. economy, especially in the labor market, and the Obama administration agrees.
"The sequestration's going to make some important cuts, which are going to hurt people, it's going to hurt investment, and it's going to slow economic growth and job creation," Alan Krueger, chairman of the White House Council of Economic Advisers, said Friday, while touting that the jobs numbers " show that the recovery is gaining traction."
Stocks gain after jobs report, but tech stocks lag
Wall Street has already shown that it is ignoring another round of political gamesmanship in Washington D.C., and investors didn't let fears stop them from celebrating the good economic news with a rally Friday. All three major U.S. indexes advanced, with the Dow Jones industrial average establishing another record close of 14,397 and the Standard & Poor's 500 closing less than 1 percent from its all-time high.
Nine of the 30 components of the Dow hit 52-week highs during Friday's rally, including San Jose networking leader Cisco Systems (CSCO), and San Ramon oil giant Chevron. Gains would have been larger if not for declines in bank stocks after the Federal Reserve announced that 17 of the nation's largest 18 banks passed a "stress test," but did not announce if any would be allowed to raise their dividends.
Tech stocks trailed the rest of the market, with the tech-heavy Nasdaq trailing the other two main indexes and the SV150 index of Silicon Valley's largest technology companies gaining just 0.1 percent on the day. One of the largest gains of the day on Wall Street belonged to Pandora, as the Oakland streaming-radio company shot up 17.6 percent to $13.79 after announcing a strong earnings report and the departure of its CEO.
San Francisco consumer-reviews company Yelp also had a strong day, gaining 6.6 percent to $25.01 on twice the average volume despite no apparent news on the company. Tiny Palo Alto software firm Broadvision also had an unexplained spike in its stock price, gaining 22 percent on volume of 1.15 million shares; the company's volume is typically about 34,000.
On the negative side, Facebook declined 2.1 percent a day after receiving a bounce from its announcement of a redesigned News Feed, and Intel (INTC) dropped 1.4 percent as reports said that the Santa Clara chipmaker is not as close to a deal with Apple (AAPL) as a report from Reuters the previous day suggested.
Google to lay off 10 percent of workforce at Motorola
One of the hottest stocks of 2013, Google, quieted down a bit Friday after the company announced that it would lay off another 1,200 employees at acquisition Motorola Mobility.
Google already announced 4,000 layoffs at the company last year, but will lop off another 10 percent of the workers as it seeks to make its $12.5 billion purchase profitable. The Wall Street Journal reported that an internal email on the move said "our costs are too high, we're operating in markets where we're not competitive and we're losing money."
The Mountain View search giant declined 0.1 percent to $831.52.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 12.28, or 0.38 percent, to 3,244.37
The blue chip Dow Jones industrial average: Up 67.58, or 0.47 percent, to 14,397.07
And the widely watched Standard & Poor's 500 index: Up 6.92, or 0.45 percent, to 1,551.18
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.