By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stock futures edged higher in choppy trading on Friday after government data showed the economy added many fewer jobs than expected in December.
Stock futures initially erased gains and briefly dipped into the red, but subsequently turned back up after the release of the Labor Department's employment report.
Futures for the Dow Jones Industrial Average (DJH4) were last up 20 points to 16,411, compared with a gain of 58 points right before the jobs data.
S&P 500 index futures (SPH4) added 3 points to 1,836.10 and Nasdaq 100 futures (NDH4) rose 6.75 points, or 0.2%, to 3,554.50.
The U.S. economy added just 74,000 jobs in December to mark the smallest increase since the start of 2011, suggesting that the nation entered 2014 with less momentum than a raft of other economic indicators had suggested. The unemployment rate fell to 6.7% from 7%, the lowest level since October 2008, but that was mostly due to people dropping out of the labor force.
Economists surveyed by MarketWatch expected an increase of 193,000 nonfarm jobs, with unemployment holding steady at 7% in December.
"The knee-jerk reaction in the futures market to the disappointing jobs data is understandable as markets take these numbers too seriously. Economists, however, know that such numbers are subject to revision and given all the earlier surveys we had, which showed that hiring intentions were on the rise, they are likely to be revised upwards, said Quincy Krosby, market strategist at Prudential Financial. "Also, we need to remember that cold weather in December kept a lot of people from looking for jobs and brought the unemployment rate to 6.7%," Krosby said.
"We will see how much significance markets will put into these numbers during the course of trading," Krosby said. "If they think the labor market recovery is halted, then we will see selling in consumer discretionary and financial stocks, while people will pile into defensive sectors. However, no one knows whether we are back to the environment where "bad news is good news".
The S&P 500 (SPX) managed a fractional gain on Thursday, but the Dow (DJI) and Nasdaq Composite (RIXF)dropped as shares of big telecom companies fell.
Fawad Razaqzada, technical analyst at Forex.com, said the trend in the stock market "is still defiantly bullish, and we haven't seen any obvious reversal patterns unfold yet."
"What's more, the Fed has made it clear that interest rates may be kept at their current low levels 'well past' the time when the unemployment rate declines below the 6.5% threshold," he added, noting that any Dow retreat from here would represent a "healthy correction."
Overseas, Europe stock gains eased after the U.S. jobs data. In Asia, stocks in Shanghai ended the day lower after data showed Chinese exports grew 4.3% on the year in December, slower than the 4.5% expected by economists. The dollar gave up gains after the employment report, but gold priced rose. Oil prices rebounded, helped by Chinese import data and weaker dollar.
Shares of Alcoa Inc. (AA) fell nearly 7% in premarket trade after the aluminum producer reported quarterly earnings that fell short of expectations.
Shares of Sears Holdings Corp. (SHLD) were off more than 13% in premarket action, after the retailer reported weak holiday sales and a quarterly forecast well below Wall Street expectations late Thursday.
On the upside, shares of Abercrombie & Fitch Co. (ANF) rallied more than 16% in premarket trade after the youth-geared apparel retailer raised its outlook for the year.
More stories on MarketWatch:
Bill Gross turns contrarian on the Fed
Investors bet on rate hikes as bond market tests Fed
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-Anora Mahmudova; 415-439-6400; AskNewswires@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
01-10-14 0926ETCopyright (c) 2014 Dow Jones & Company, Inc.
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