Stocks ended the week on a sour note, surrendering Thursday's gains as markets failed to rally on a stronger-than-expected payrolls report from the U.S. Labor Department.
Some observers suggested the good news in the jobs numbers became overshadowed by concerns over next week's U.S. Presidential election. The jobs figures may help give Barack Obama an extra boost in support, and his win may not be all that favourable for markets given perceptions there will still likely be a Congress split between Republicans and Democrats, making it tougher to avoid the "fiscal cliff" scenario. There was also speculation Friday that a stronger jobs market could mean the U.S. Fed will ease back on future quantitative easing.
The Dow Jones industrial average closed at 13,093.16, down 139.46 points or 1.1 per cent. The broader S&P 500 closed at 1414.20, down 13.39 points or 0.9 per cent. In Canada, the S&P/TSX composite index closed at 12,380.41, down 119.35 points or 1 per cent.
The moves follow an upbeat report on payrolls in October. U.S. employers added 171,000 jobs last month, topping estimates for job gains of 125,000. Although the unemployment rate rose to 7.9 per cent from 7.8 per cent, the gain was due to more people looking for work. As well, September's payrolls report was revised higher.
The news hammered the price of gold, with investors betting that good news for the economy might mean less stimulus from the Federal Reserve and a higher U.S. dollar. Gold fell to $1,675.20 (U.S.) an ounce, down $40.30 – marking its sharpest one-day dip since June.
Gold producers certainly reacted to the move, just a day after Barrick Gold Corp. weighed on the sector with disappointing earnings and rising cost estimates. Barrick fell 3.6 per cent and Goldcorp Inc. fell 5 per cent.
Meanwhile, crude oil also declined sharply – to $84.86 a barrel, down $2.23. Chevron Corp. fell 2.8 per cent, coinciding with its quarterly report showing earnings down 33 per cent over last year, due to lower production. Canadian Oil Sands Ltd. fell 2.1 per cent.
The news wasn't all gloomy. Starbucks Corp. rose 9.1 per cent after the coffee chain reported a 6 per cent increase in sales among stores open for at least 13 months, beating expectations. The company also raised its full-year earnings forecast and said it would speed-up new store openings.