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Stocks slip, bond yields fall after weak jobs report

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Stocks are down across the board Friday, though modestly, as investors react to the disappointing December employment report.

What’s bad for stocks is a relief to the Treasury bond market, where yields are falling in part on the expectation that the economy won’t accelerate to the point of boosting inflation pressures.

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The Dow Jones industrial average was down 58 points, or 0.50%, to 11,638 at about 11 a.m. PST.

The 10-year Treasury note yield pulled back to 3.33% from 3.41% on Thursday.

The government’s report that the economy created a net 103,000 new non-farm jobs last month -- well below the 150,000 that analysts had expected -- continues the pattern that’s all too familiar to Americans: Although much of the economic data of recent months has pointed to a strengthening recovery, many employers clearly remain reluctant to add jobs.

Private-sector employers created a net 113,000 jobs last month instead of the 175,000 that analysts had expected, on average.

One bit of good news: Job gains in October and November were revised higher. The November figure for non-farm payrolls, initially a very disappointing net 39,000 jobs, was revised up to 71,000. The October figure was lifted to a fairly robust 210,000 from 172,000.

So stock market bulls can justify staying the course by expecting that the December figure, too, will be revised higher.

In testimony before a Senate panel on Friday, Federal Reserve Chairman Ben S. Bernanke stayed on point: He said the central bank has seen ‘increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,’ but that ‘conditions in the labor market have improved only modestly at best.’

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In other words, the Fed sees no reason to pull back the support it’s providing the economy via rock-bottom short-term interest rates and its Treasury-bond purchase program.

-- Tom Petruno

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