U.S. stocks fell Friday after stronger-than-expected December job growth dimmed hopes for a potential interest-rate cut and a disappointing forecast from Motorola Inc. (MOT) revived concerns about corporate profits.

The Dow Jones industrial average was down 82.68 points, or 0.66 percent, at 12,398.01. The Standard & Poor's 500 Index was down 8.63 points, or 0.61 percent, at 1,409.71. The Nasdaq Composite Index was down 19.18 points, or 0.78 percent, at 2,434.25.

The U.S. economy created a surprisingly strong 167,000 jobs in December and hourly wages showed the sharpest rise in eight months, the Labor Department said in a report suggesting the Federal Reserve would be unlikely to change its current stance soon.

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"These employment numbers, quite frankly, have people thinking the economy's stronger than most were giving it credit for," said Hans Olsen, chief investment officer at Bingham Legg Advisers in Boston. "It would be difficult for the Fed to back away from a vigilant stance on inflation with respect to interest rates. ... The interest rate cuts that everybody's been hoping for aren't going to come to pass anytime soon."

The sharp declines in the Dow and the S&P dragged both indexes lower for the week. The first week of the year had only three trading days due to the New Year's day holiday and the national day of mourning for former President Gerald Ford.

Shares of Motorola, the world's second largest cell phone maker, dropped 7.8 percent to $18.94 and recorded their biggest one-day percentage drop in two years. Motorola cut its sales and earnings outlook for the recently ended fourth quarter to a number significantly below Wall Street's estimates, sparking concern about profitability for the sector.

Several brokerages cut their ratings on the stock.

"Earnings season is coming up and there could be some concern about how these companies will follow through," Olsen said.

One of the biggest drags on Nasdaq was wireless chip maker Broadcom (BRCM) Corp. Credit Suisse cut its rating and price target on Broadcom, saying it expects a temporary product cycle lull in 2007. Shares fell 3.2 percent to $32.50.

Shares of interest-rate sensitive financial stocks also fell, with Bank of America Corp. down 0.8 percent at $53.24 and Citigroup Inc. (C) off 0.5 percent at $54.77.

Small company stocks also dropped, as those companies tend to rely on low interest rates for cheap borrowing costs. The Russell 2000 index of small cap stocks dropped 1.8 percent.

But shares of General Motors Corp. (GM) bucked the trend, rising 2 percent to $30.24 after Chief Executive Rick Wagoner said the company will cut more jobs this year as it closes plants and tries to get concessions from its major union in a crucial round of contract negotiations.

In the afternoon, Fed Chairman Ben Bernanke spoke to business groups in Chicago but did not comment on the current economy or future monetary policy.

The Dow ended the week 0.5 percent lower and the and S&P was 0.6 percent lower for the week. The Nasdaq rose 0.8 percent for the week.

Trading was active on the New York Stock Exchange Friday where about 1.72 billion shares changed hands, below the 1.84 billion daily average for last year. On Nasdaq, about 2.1 billion shares traded, just above the 2.02 billion daily average last year.

Declining shares beat advancers by about 3 to 1 on both the NYSE and Nasdaq.

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