Stocks fall as Dec. job losses top estimates

Stocks retreated Friday after the government said employers cut more jobs than expected last month. Interest rates fell as some investors sought the safety of Treasury notes and bonds.

The Labor Department, which also said the unemployment rate stayed at 10 percent, reported that employers cut 85,000 jobs last month, worse than the 8,000 drop analysts expected.

The report also signals that many jobless people are giving up on their search for work.

The news reminded investors that the economic recovery is likely to be a fitful one. Data from the previous two months was revised to show that the economy generated 4,000 jobs in November, the first gain in nearly two years. But the revisions showed it also lost 16,000 more jobs than previously estimated in October.

A year ago, when the economy was still reeling from paralyzed credit markets and the collapse of several big national banks, the Dow Jones industrial average fell 143 points on news that the unemployment rate had climbed more than expected to 7.2 percent during December 2008. Employers cut 524,000 jobs that month.

In early morning trading, the Dow Jones industrial average fell 22.45, or 0.2 percent, to 10,584.41. The Standard & Poor's 500 index fell 1.68, or 0.2 percent, to 1,140.01, while the Nasdaq composite index fell 0.13, or less than 0.1 percent, to 2,299.92.

Interest rates fell and bond prices rose as uneasiness about the economy sent investors looking for the security offered by government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.80 percent from 3.83 percent late Thursday.

Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 130 million shares, compared to 145.6 million traded at the same point Thursday.

In corporate news, UPS Inc. shares rallied after the delivery service company said its fourth-quarter results would top previous estimates.

UPS shares rose $2.93, or 5.1 percent, to $60.34.

European markets were mostly lower following the U.S. jobs data. They were also reacting to a report that showed unemployment in the 16 countries that use the euro rose to 10 percent in November for the first time since the single currency was introduced at the start of 1999.

Earlier, Asian stocks advanced after upbeat holiday sales figures suggested American consumers were spending more.

The dollar fell against other major currencies, while gold prices rose.

The Russell 2000 index of smaller companies fell 0.33, or 0.1 percent, to 641.64.

Overseas, Japan's Nikkei stock average rose 1.1 percent. Britain's FTSE 100 fell 0.3 percent. Germany's DAX index declined 0.4 percent, while France's CAC-40 rose 0.6 percent.

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Augstums reported from Charlotte, N.C.