Stocks dip as September jobs report disappoints

U.S. stocks fell Friday after the government reported that more jobs were lost in September than had been expected.

Major indexes were off their lows by midmorning as investors looked for bargains after four straight days of losses.

The day's news continued a drumbeat of bad indicators for the economy, especially the still-struggling job market. The Labor Department reported that employers cut 263,000 jobs last month, up from 201,000 in August and worse than the 180,000 losses economists were expecting. The unemployment rate rose to 9.8 percent, in line with forecasts.

Unemployment has been one of the market's biggest concerns throughout the recession because lost jobs mean trouble for nearly every part of the economy, from consumers defaulting on loans, cutting back their spending and getting forced into foreclosure on their homes. Most economists expect the rate to surpass 10 percent by early next year.

A surprise decline in factory orders Friday was also troubling investors. The Commerce Department said factory orders fell 0.8 percent in August following a 1.4 percent gain in July. Analysts had been expecting a 0.7 percent increase.

The decline in stocks was more moderate than the previous day's big drop, when the Dow tumbled more than 200 points after a disappointing report on manufacturing activity dealt another blow to optimism that had been emerging about a recovery in the industrial sector.

A spate of bad economic news this week has led to even more doubts that the 50 percent surge in stocks over the past six months can be sustained. After coming within 82 points of the 10,000 level last week, the Dow has pulled back about 4.5 percent.

"Pullbacks are going to constantly be used as opportunities to get into the market," said Hank Smith, chief investment officer of equity at Haverford Investments in Radnor, Pa.

In late morning trading, the Dow fell 29.55, or 0.3 percent, to 9,479.73, after earlier falling as much as 79 points. The Standard & Poor's 500 index fell 3.43, or 0.3 percent, to 1,026.42, and the Nasdaq composite index fell 2.85, or 0.1 percent, to 2,054.63.

About 3 stocks fell for every one that rose on the New York Stock Exchange, where volume came to 456.3 million shares, compared with 358 million at the same time on Thursday.

In other trading, the Russell 2000 index of smaller companies lost 3.66, or 0.6 percent, to 580.09.

Government bonds reversed early gains and moved lower. The yield on the benchmark 10-year Treasury note rose to 3.20 percent from a five-month low of 3.18 percent late Thursday. Yields on bonds move opposite to their prices.

The dollar was mixed against other currencies. Gold prices rose.

In corporate news, struggling small business lender CIT Group Inc. said late Thursday it launched a debt restructuring program it hopes will trim at least $5.7 billion from its balance sheet. CIT is asking bondholders to approve a prepackaged reorganization plan in case it is forced to file for bankruptcy protection.