Richard Drew/AP
Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday. Stocks rose in early trading on Wall Street after the government reported that the U.S. unemployment rate fell below 8 percent. The rally failed to persist through the afternoon.

Stocks barely flinch after good jobs report

Stocks initially rose on news of the unemployment rate dropping to 7.8 percent. But in afternoon trading, stocks failed to hang onto early gains.

U.S. stocks failed to hang onto early gains on Friday after the government said the unemployment situation was better than many economists had expected.

Stocks initially rose on that news. But in afternoon trading, the sugar rush was over. The Dow Jones industrial average edged up seven points to 13,583 with 15 minutes of trading left, after rising as much as 86 points earlier in the day. The Standard & Poor's 500 index fell two points to 1,459, and the Nasdaq was down 15 points at 3,135.

The unemployment rate declined to 7.8 percent, its first dip below 8 percent in nearly four years. The decline from 8.1 percent the month before was bigger than economists had expected. The Labor Department also said employers added 114,000 jobs last month. That was in line with what economists were expecting, but the government also revised its estimates higher for job growth in July and August.

Unemployment's drop to 7.8 percent "really is not a big game-changer," said Peter Cardillo, chief market economist at Rockwell Global Capital. "Yes, more people were hired, but job creation did come in in line with expectations."

"The jobs report today was just a validation that things are improving and that people are feeling good about things," said Marty Leclerc, chief investment officer of Barrack Yard Advisors. "So as investors, of course, that's when we're most apprehensive."

Consumer discretionary stocks rose, led by Home Depot and Lowe's, both up more than 2 percent. Industrialstocks also rose. Technology and energy stocks had broad declines.

U.S. stocks making noteworthy moves included:

Apple fell $14.77, or 2.2 percent, to $652.03, causing the Nasdaq to perform worse than other indexes.

Zynga plunged 35 cents, or 12.6 percent, to $2.46 after the online game maker said that it expects a third-quarter loss due to weak demand and a charge related to an acquisition.

— Dow component Hewlett-Packard fell 13 cents to $14.81. Moody's Investors Service said it was reviewing its investment-grade credit rating for a possible downgrade after the PC and printer maker cut its profit forecast.

Avon Products rose $1.13, or 7 percent, to $17.35 after announcing that its chairman and former CEO Andrea Jung will step down at the end of the year. Jung had come under fire for failing to reverse the company's declines and wrap up a bribery investigation.

Constellation Brands rose $1.33, or 3.8 percent, to $36.05. The wine and liquor company's quarterly results beat Wall Street's forecasts, and it raised its full-year forecast.

Stocks rose in Europe, too. The FTSE 100 index of leading British shares was up 0.7 percent, while Germany's DAX rose 1.3 percent and the CAC-40 in France was up 1.6 percent.

The dollar was trading steadily across a range of currencies, with the euro unchanged at $1.302.

The yield on the 10-year U.S. Treasury note rose to 1.73 percent from 1.68 percent as investors shifted money from bonds into stocks.

The price of oil fell despite the better U.S. jobs figures as investors booked gains from a big rise caused by concerns over the recent clashes between Turkey and Syria. The benchmark New York crude oil price fell $1.83 to $89.88 per barrel.

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