U.S. Stocks Start With A Drop On Jobs Shock

NEW YORK (MarketWatch) -- U.S. stocks sold off at the opening bell Friday in the wake of a surprising decline in August employment -- the first such drop seen in nonfarm payrolls in nearly four years.

The Labor Department said U.S. nonfarm payrolls fell an estimated 4,000 in August, while the unemployment rate held steady at 4.6% as fewer people were deemed to be seeking to find jobs.

"It's a major shock to the market," said Peter Cardillo, chief market strategist at chief market economist at Avalon Partners.

"This employment report is shocking to most Wall Street observers but not to the thousands that have been thrown out of work in the housing and mortgage industries," Eliot Spar, market strategist at Stifel Nicolaus & Co., wrote in an early comment.

The Dow Jones Industrial Average shed 153.8 points to 13,209.5, with all of but one its 30 components trading lower.

The S&P 500 fell 19.69 points at 1,458.86 and the Nasdaq Composite dropped 38.61 points at 2,575.71.

Later, at 10 a.m. Eastern time, wholesale inventories figures for July are slated for release.

Shares of Harley Davidson Inc. fell 9% after the motorcycle maker cut its projections for third-quarter shipments and annual earnings. .

Meanwhile, Bear Stearns fell after Banc of America Securities cut its rating to neutral from buy, citing weaker fixed-income trends.

Shares of Wyeth also face selling pressure in the wake of a federal court decision denying its attempt to block Teva Pharmaceutical Industries from launching a generic version of the drug Protonix.

Hovnanian Enterprises Inc. late Thursday reported third-quarter losses of $77.9 million.

Beazer Homes USA Inc. said it has received purported default notices from U.S. Bank National Association, the trustee under the indentures governing several outstanding senior notes. But the Atlanta home builder called the notices "invalid."

Also in the spotlight, HSBC Holdings is the latest target of U.S. activist investor Knight Vinke, with the fund manager calling for a "fundamental review" of the global banking giant's strategy. .

Leap Wireless International is considering a takeover offer from MetroPCS Communications without the input of its chief financial officer, who has resigned.

In early action at the New York Mercantile Exchange, December gold was back on the rise, gaining $4.10 to hit $708.70 an ounce.

The dollar was down against its major rivals, falling 1% against Japan's yen as the euro moved 0.5% higher.

In typical flight-to-safety buying spurred by the payrolls data, Treasury prices gained, with the benchmark 10-year note up 27/32 at 104 2/32 with a yield of 4.422%.

In overseas stock market action, the Nikkei 225 closed 0.8% weaker in Tokyo and the FTSE 100 turned weaker.

By Kate Gibson