Stocks dip on GM loss, oil, jobs data

By Steven C. Johnson

NEW YORK (Reuters) - U.S. stocks fell on Friday as a $15.5 billion quarterly loss from General Motors (GM.N) and a rise in oil prices added to fears the economy could slip into recession and concerns about corporate earnings.

A government report showing U.S. employers cut jobs for the seventh straight month in July added to market worries, though the decline in payrolls was not as severe as had been feared. The report also showed the jobless rate jumped to its highest level in four years.

General Motors' (GM.N) second-quarter loss was the latest example of how rising oil prices are hurting consumer spending. Its shares slumped 7.6 percent to $10.23 and weighed on the Dow and S&P.

Sliding global metal prices and weak manufacturing data around the world knocked the shares of aluminum maker Alcoa (AA.N) nearly 5 percent lower. Shares of Caterpillar (CAT.N), the mining and heavy equipment maker, fell 2 percent. The two were the top drags on the Dow.

Crude oil CLc1> settled up $1.02 at $125.10 a barrel in New York after Israeli Deputy Prime Minister Shaul Mofaz said Iran was heading toward a major breakthrough in its nuclear program, fanning concerns of a potential confrontation that could disrupt supply from the OPEC nation.

"The stock market is down because oil went back up," said Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "We have more market tension with oil than with the employment report."

The Dow Jones industrial average .DJI was down 51.70 points, or 0.45 percent, at 11,326.32. The Standard & Poor's 500 Index .SPX was down 7.07 points, or 0.56 percent, at 1,260.31. The Nasdaq Composite Index .IXIC was down 14.59 points, or 0.63 percent, at 2,310.96.

For the week, the Dow ended down 0.4 percent, the S&P closed up 0.2 percent and the Nasdaq ended flat.

"Add up the scorecard and it says the economy is neither collapsing nor recovering rapidly," said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.

Caterpillar, the maker of bulldozers and excavators, fell 2 percent to $68.14 on the New York Stock Exchange, while Alcoa shares slid to $32.14, down 4.8 percent.

On Nasdaq, the biggest drag came from biotechnology company Biogen (BIIB.O), whose stock slid more than 28 percent to $50.01 on renewed safety concerns about its multiple sclerosis drug. Two new brain disease cases were detected in patients taking Tysabri, which Biogen jointly manufactures with its Irish partner Elan (ELN.I)(ELN.N) ID:nL1273893.

Shares of Sun Microsystems (JAVA.O), the world's No. 4 business computer maker, lost 12.3 percent to $9.32 after the company warned about its business outlook.

The losses all came on another day of worrisome economic data. The nonfarm payrolls report showed employers cut 51,000 jobs in July. Some investors were heartened because that was fewer than the 75,000 loss forecast by analysts. But it still marked the seventh straight month of job losses.

"The employment data was OK when compared to what some people had feared but does reiterate that the economy is certainly in a jobs recession," said Jordan Posner, portfolio manager at Matrix Asset Advisors in New York.

The unemployment rate also rose to 5.7 percent, a four-year high, from 5.5 percent in June.