NEW YORK Global stocks and crude oil retreated on Friday even after a U.S. employment report for October surpassed expectations, as investors looked beyond next week's presidential election to anemic outlook for global economic growth.
The dollar jumped to a more-than-six-month peak against the yen and a three-week high versus the euro after U.S. employers stepped up hiring and the unemployment rate ticked higher as more workers renewed job hunts, a hopeful sign for the economy.
Demand for U.S. factory goods also rose in September by the most in over a year, but a gauge of business investment plans showed lackluster momentum in the economic recovery despite a slight upward revision.
But the plans for business spending highlighted the anemic outlook for the global economy next year, a picture that is shining through in corporate results.
"We've seen the market trend lower primarily related to disappointing revenue reports coming out of third-quarter earnings stream," Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "There may be a little bit of pre-election jitters as well hitting the market."
Corporate earnings have been decelerating for months and are expected to be flat in 2013 when compared to this year's fourth quarter, said Ben Halliburton, chief investment officer at Tradition Capital Management in Summit, New Jersey.
"Europe is clearly going into a deep recession, Japan is anemic, China is not going to be the growth engine next year, so you look around for engines of growth and it's pretty difficult to find on a global basis," Halliburton said.
The employment data was the last major report card on the U.S. economy before Tuesday's presidential election. Polls show President Obama and Republican Mitt Romney locked in a dead heat in a race that may hinge on the nation's feeble jobs market.
Todd Schoenberger, managing principal at the BlackBay Group in New York, said the employment report was good but "not good enough" to push stock higher.
An equity sell-off late in the session pushed stocks down 1 percent of more.
The Dow Jones industrial average closed down 139.46 points, or 1.05 percent, at 13,093.16. The Standard & Poor's 500 Index fell 13.39 points, or 0.94 percent, at 1,414.20. The Nasdaq Composite Index slid 37.93 points, or 1.26 percent, at 2,982.13.
For the week, the Dow shed 0.1 percent and the Nasdaq ended 0.2 percent lower, but the S&P 500 gained 0.2 percent.
Despite the surprisingly strong jobs date, the economy is still struggling, helping bond prices to pare losses to rebound.
The benchmark 10-year U.S. Treasury note pared losses to trade up 3/32 in price, with its yield at 1.719 percent.
"Incomes aren't really growing, and if incomes don't grow, how can spending grow?" said Wilmer Stith, vice president and portfolio manager of the Wilmington Broad Market Bond Fund in Baltimore. "By no means is the economy out of the woods."
In Europe, the FTSEurofirst 300 index of top European shares closed up 0.5 percent at 1,115.19.
The MSCI all-country equity index of world shares slipped 0.43 percent to 330.40.
Oil fell as weak European data reinforced a gloomy picture for the demand outlook. Euro zone manufacturing shrank for the 15th month running in October as output and new orders fell, a survey showed.
Weak growth, high prices and better vehicle fuel efficiency pushed down fuel consumption in most of Western Europe over the summer, official statistics showed.
Also, the auto market in western Europe maintained a sharp descent toward levels last seen nearly 20 years ago as consumers worried about unemployment and euro zone austerity affected car dealerships in October.
Brent crude for December settled down $2.49 to $105.68 a barrel, while U.S. crude for December delivery fell #2.23 to settle at $84.86.
The dollar was aided by the jobs report and some safe-haven buying, while the euro slid on the dismal economic outlook.
The U.S. dollar index was up 0.66 percent at 80.577, and the euro was down 0.87 percent at $1.2829.
(Additional reporting by Marc Jones in London; Doris Frankel in Chicago; Ryan Vlastelica, Gertrude Chavez-Dreyfuss and Ellen Freilich in New York; Reporting by Herbert Lash; Editing by Chizu Nomiyama and Diane Craft)