Wall Street ended a dismal week with its third straight decline Friday after oil prices jumped on word of a possible string of attacks in Nigeria near production facilities. The rise in oil prices sapped enthusiasm over a Labor Department report that the nation’s unemployment rate fell to a five-year low.
Alan Gayle, senior investment strategist and director of asset allocation for Trusco Capital Management, said the employment figures suggest the economy has more power than expected going into the holiday spending season but warned that the strength could make the Fed uneasy. “Investors have to digest the notion that the Fed is going to remain poised to lift interest rates as we go into 2007.”
For the week, the Dow fell 0.86 percent, while the S&P lost 0.95 percent and the Nasdaq lost 0.84 percent.
Friday’s economic data sent bonds falling sharply; the yield on the benchmark 10-year Treasury note jumped to 4.71 percent from 4.60 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Last month, investors believing a soft landing was in the offing sent stocks higher; the Dow and other indexes rose more than 3 percent. But this week Wall Street has been casting about as it tries to reconcile its desire for a slowdown with weak economic readings. There was a sense among many investors that perhaps Wall Street was getting too much of what it wanted in the form of weak economic news.