Nasdaq Up, Dow and S&P Flat Amid Dismal Jobs Data

Technology stocks rose slightly Friday on persistent hopes for a brighter 2003, but other indexes closed little changed after the economy recorded a surprising loss of 101,000 jobs in December and as U.S. tensions with North Korea escalated.

The tech-havy Nasdaq Composite Index closed up 9.29 points, or 0.65 percent, at 1,447.75, while the blue-chip Dow Jones industrial average edged 8.77 points higher, or 0.1 percent, at 8,784.95. The broader Standard & Poor's 500 Index was flat, closing at 927.57, the exact same close as Thursday.

For the week, the Nasdaq rose 4.4 percent, while the Dow was ahead by 2.1 percent and the S&P 500 rose 2.1 percent.

"Overall my feelings are pretty constructive," said Brian Pears, head of equity trading at Victory Capital Management. "The fact that we haven't given back any of the gains (of the new year's rally) is good."

The already troubled U.S. job market took a turn for the worse in December -- shedding 101,000 jobs in contrast with expectations companies would add jobs, the government said before the open. The jobs drop was the largest since February, when the economy lost 165,000 jobs. For 2002 as a whole, the economy shed a net 181,000 jobs.

"This is definitely a bearish report. We were looking for job creation, and we got the complete opposite," said Burton Schlichter, senior market analyst at Lind-Waldock & Co., a division of Refco LLC. "It's a surprise to the market, and the market does not like surprises. This dampens the recent euphoria that this market has created."

Global tensions helped put a damper on the market's mood. The market eased after North Korea's U.N. ambassador said a U.S. offer to hold talks on his country's nuclear program without being willing to engage in full negotiations showed a lack of sincerity.

"If there wasn't any North Korea issue, this market would be a up a lot more," said Anthony Iuliano, head equity trader for Glenmede Trust Co.

The new year's rally, which has pushed the Dow 5.3 percent higher so far in January, has been fueled in part by investors' reallocation of assets. With money markets paying so little, and little upside seen in bonds, some fund managers have taken on greater risk in the hopes of boosting their return.

"The move up in stocks (after the jobs report) seemed to be fueled by some moves out of bonds," said Brett Gallagher, deputy chief investment officer at Julius Baer. "We've been hearing anecdotally that pension funds have come to the conclusion to make 9 percent on their money they're going to have to increase their exposure to equities," he said.

FleetBoston Financial Corp. (FBF) halved its earnings outlook for the fourth quarter as it set aside $800 million to cover loan losses. The latest loan loss provision, partly due to big corporate bankruptcies in the weak U.S. economy, will be $450 million higher than the third quarter's, Fleet said.

Fleet shed 10 cents, or 0.4 percent, to $27.40.

Schering Plough Corp. (SGP) sounded a sour note ahead of a rush of earnings reports next week. The drug maker fell 10 cents, or 0.4 percent, to $22.96, after cutting its 2002 earnings target due to a rapid decline in sales of allergy drug Claritin, which began selling without a prescription in the United States last month.

Decode Genetics (DCGN) surged 87 cents, or 41 percent, to $2.97. Investment bank J.P. Morgan raised its rating of the company to "overweight" from "neutral," saying little value was currently being attributed to the biotech company's product pipeline.

United States Steel Corp. (X) rallied $1, or 7.3 percent, to $14.70. Investment bank Prudential Securities raised its rating for the steelmaker to "buy" from "hold," lauding its announcement on Thursday that it would buy smaller rival National Steel Corp. (NSTLB)

Debt-laden Mirant Corp. (MIR) slumped 35 cents, or almost 13 percent, to $2.39. The power producer and trader said it plans to sell $300 million more in assets in another round of restructuring to strengthen its financial position.

French telecoms equipment giant Alcatel (ALA) jumped 52 cents, or more than 10 percent, to $5.52. Investors were betting a strategy meeting on Tuesday could reveal some new restructuring measures for the company, traders said.

Software maker InterCept Inc. (ICPT), however, tanked $1.56, or more than 15 percent, to $7.94. The company slashed its profit outlook, citing weak spending by its customers, and said it is withdrawing previously issued earnings guidance for 2003.

Rising shares slightly outnumbered declining shares on the New York Stock Exchange, and gainers outnumbered decliners by almost 6 to 5 on Nasdaq. Almost 1.5 billion shares were traded on the NYSE and more than 1.65 billion shares traded on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, fell 0.15, or 0.04 percent, to 395.79.

Overseas, Japan's Nikkei stock average finished Friday down 0.3 percent. In Europe, France's CAC-40 rose 0.3 percent, Britain's FTSE 100 advanced 1 percent and Germany's DAX index slipped 0.1 percent.

Reuters and the Associated Press contributed to this report.