A relatively weak report on jobs dragged stocks lower Friday. Banks took a hit after a Massachusetts court upheld a ruling against U.S. Bancorp and Wells Fargo & Co. in a closely watched foreclosure case.
The Labor Department said 103,000 jobs were created last month, less than analysts expected. Job growth has remained sluggish in the U.S. since the recession ended in June 2009.
A separate survey from the Labor Department found that the unemployment rate fell to 9.4 percent last month. That's a decrease from 9.8 percent in November and the lowest rate in 19 months. The lower rate means that many people found jobs but also that others stopped looking.
"On balance, this was a pretty disappointing report," said Hugh Johnson, chairman and chief investment officer of Johnson Advisors. It "suggests we have a long way to go to recover the 8.4 million jobs that we lost during the crisis."
JPMorgan Chase & Co. and Bank of America Corp. were the biggest losers among the 30 stocks that make up the Dow Jones industrial average. Banks fell as investors worried that the foreclosure ruling in Massachusetts could set a precedent for other cases against lenders. Bank of America, the largest holder of mortgages in the U.S., fell 3 percent to $14.07. JPMorgan also lost 3 percent to $43.02.
The highest court in Massachusetts found that U.S. Bancorp and Wells Fargo failed to prove that they owned the mortgages in two cases where homeowners were in foreclosure. Lenders have been under scrutiny from law enforcement officials since last fall over accusations that they bungled foreclosure proceedings and had shoddy record-keeping practices.
The Dow fell 74 points, or 0.6 percent, to 11,622. in early afternoon trading.
The Standard & Poor's 500 index fell 9, or 0.7 percent, to 1,264. The Nasdaq composite index fell 23, or 0.8 percent, to 2,687.
In testimony on Capitol Hill, Federal Reserve Chairman Ben Bernanke said he was optimistic that the economy would grow this year. But he also said it could take four to five years for unemployment to return to normal levels of about 6 percent.
Bond prices rose, sending their yields lower. The yield on the 10-year Treasury note fell to 3.32 percent from 3.40 percent late Thursday. The yield helps set interest rates on many kinds of loans including mortgages.
KB Home rose nearly 5 percent to $15 after the homebuilder surprised Wall Street with a profit. AstraZeneca PLC fell 1 percent to $46.85 after the British drug maker said the Food and Drug Administration will take more time to review the company's application for a drug that treats a rare type of thyroid cancer.