Stock Rally Reverses as Dollar Bounces Back

The stock rally lost steam Friday as the dollar gained on the jobs surprise, sending investors out of stocks and commodities.

In early afternoon trading, the Dow was bobbing in and out of negative territory, after being up more than 100 points at the open on the unexpected improvement on the jobs front.

The dollar rose sharply on news that US employers slashed 11,000 jobs from nonfarm payrolls in November, the smallest decline since the start of the recession in December 2007. The five-digit number caused more than a few doubletakes on Wall Street as many wondered if there was a digit left off that number and it was really 111,000 — more in-line with recent figures.

In addition to the encouraging payrolls reading, the unemployment rate dropped to 10 percent from 10.2 percent.

"We're almost back to normal," Chris Rupkey, chief financial economist at Bank of Tokyo/Mistubishi UFJ, said after the jobs report. "The economy is lifting at a much greater rate than expected."

Adding to the upbeat economic news, factory orders rose an unexpected 0.6 percent in October. Economists had expected the gauge to be unchanged. Plus, September's reading was revised higher.

As the dollar crept higher, it eventually took the steam out of the stock rally — and the recent surge in commodities.

Gold fell below $1,180 an ounce, after setting a record above $1,200 earlier this week. Oil dropped below $77 a barrel.

Alcoa , DuPont and Travelers were the biggest drags on the Dow.

Market pros said the jobs report was a game-changer for the market.

"I think this is fantastic news," Jamie Cox of Harris Financial Group said on CNBC today. "I really think now you can look toward buying financials and things like that."

Bank of America shares rose after the bank raised almost $19.3 billion in a stock offering late Thursday, which it plans to use to help pay back the $45 billion it owes the government in TARP funds.

That leaves Citigroup in the unfortunate position of being the last big bank tied to the government, the New York Times reported.

On the M&A front, Kraft made a $16.3 billion offer for CadburyFriday, triggering a takeover fight for the British chocolatier.

NBC Universal will manage content across all its platformsafter the GE-Comcast deal is complete, NBC Universal CEO Jeff Zucker said on CNBC Friday.

GE shares rose Friday following the news. Going forward, the stock may also benefit from the cyclical rotation if the Fed starts raising interest rates — a more likely possibility after today's jobs reports.

"Next year's going to be the year of the boring, I'm afraid," Cox said. "GE, I think is a good example."

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

FedEx reported it will raise shipping ratesby an average of 4.9 percent in 2010.

Toyota Motor says its earnings may not recover as fast as expected because of a still-weak U.S. economy and a rising yen.

Shares of Take-Two Interactive tumbled more than 30 percent after the videogame maker said slow game sales would clip its profit.

Retailers were mixed today amid worries about the shopping season as the holidays are fast approaching.

Big Lots shares surged over 17 percent after the discount store beat earnings expectations and raised its full-year outlook.

JCPenney and Kohl's slipped, while Gap and Bed, Bath & Beyond advanced.

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