Investing.com - U.S. stocks moved lower in Friday trade, reversing course from early session gains prompted by a positive labor report, but dragged down in the afternoon session by a ratings downgrade to Spain and Italy.
In late afternoon U.S. trade, the Dow Jones Industrial Average was down 0.07% to 11,121.80, the Nasdaq Composite Index lost 0.81% to 2,486.64, and the S&P 500 declined 0.63% to trade at 1,157.58.
Wall Street shares got an early boost from a U.S. Department of Labor report that non-farm payrolls rose to a seasonally adjusted 103,000 in September, up from 57,000 the previous month. Market expectations were for non-farm payrolls to rise to 53,000 for the period.
Labor gains in September were due in large part to the return of 45,000 unionized workers following a strike against Verizon Communications Inc.
Separately, the Labor Department reported that the U.S. unemployment rate remained unchanged in September at a seasonally adjusted 9.1%, in line with market expectations.
But stocks turned south following Fitch Rating’s cut to Italy’s credit score to A-plus from AA-minus and Spain’s rating to AA-minus from AA-plus. Fitch cited “intensification of the euro area crisis and risks to the fiscal consolidation effort arising from the budgetary performance of some regions.”
“The still sizeable structural budget deficit, high level of net and external debt and the fragility of the economic recovery as the process of deleveraging and rebalancing continues, render Spain especially vulnerable to such an external shock.”
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By the end of Friday’s European session, the STOXX 50 Index climbed 0.91% to 2,269.19, France’s CAC 40 added 0.66% to 3,095.56, Britain’s FTSE 100 rose 0.23% to 5,303.40, and Germany’s DAX advanced 0.54% to close at 5,675.70
Lower crude oil prices led to declines from energy companies, with ConocoPhillips dipping 0.24% and Exxon Mobil Corp. down by 0.5%.
Domestic demand issues benefitted from the unexpected rise in payrolls. Home Depot Inc. added 1.9%, Wal-Mart Stores Inc. was up 1.6% and drug-maker Pfizer Inc. climbed 1.5%.
Banking issues, however, sagged on the Fitch downgrade, as Bank of America slumped 4.7%, JPMorgan Chase % Co. fell 4.6% and Citigroup Inc. lost 4.5%. after cardholders filed suit against the third largest bank in the U.S. for security breaches earlier this year.
First Solar Inc. plummeted 7.3% after Bank of America Corp. cut revenue estimates for the world’s largest thin-film solar panel maker for 2011 and 2012.
The U.S. Federal Reserve Bank was scheduled to release minutes from its latest Federal Open Market Committee meeting early next week.