Market Recap: Europe Dampens Euphoria Over Sharply Lower Unemployment Rate

Markets closed mixed on Wall Street today: Dow -0.01%, S&P -0.02%, Nasdaq +0.03%, Oil +0.81%, Gold +0.56%.

On the commodities front, Oil (NYSE:USO) climbed to $101.01 a barrel. Precious metals were mixed, with Gold (NYSE:GLD) climbing to $1,749.50 an ounce while Silver (NYSE:SLV) fell 0.49% to settle at $32.60.

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Today’s markets were mixed because:

1) Unemployment rate. The mood on Wall Street was positive after the Labor Department said the U.S. unemployment rate had eased to 8.6% in November as employers added 120,000 new jobs. Last month’s unemployment rate is the lowest since March 2009. Though the 8.6% figure is skewed by the number of people dropping out of the workforce, and my temporary holiday hiring, investors were still satisfied with the pick up in hiring, and markets opened sharply higher Friday morning, with all three of the major indices topping 1% in early trading.

2) Europe. News out of Europe dampened that early euphoria, putting investors on edge and leading to sharp declines off the morning’s highs. Talk of a possible downgrade to Spain’s credit rating spooked investors and sent the Spanish 10-year yield up to 5.7%. Also, reports that Republicans would try to block any move by the European Central Bank to lend funds to the International Monetary Fund to aid Europe’s cash-strapped countries further worried investors who have become disillusioned with the government and partisan politics. Conservative lawmakers are against the Washington-based IMF’s involvement because it could leave U.S. taxpayers footing the bill.

3) Banks. Bank stocks were among the top gainers today, with Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) leading the Dow’s early advanc. Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and Citigroup (NYSE:C) shares all closed the day sharply higher despite the market’s general decline in the afternoon.

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