U.S. jobless rate drops to 9.7%; stocks rise slightly

The Labor Department said the unemployment rate fell to 9.7 percent from 10 percent in December. However, employers cut 20,000 jobs last month, more than the 5,000 economists expected, according to Thomson Reuters.

Economists forecast the unemployment rate would rise to 10.1 percent.

The “underemployment” rate, which includes part-time workers looking for full-time work and discouraged workers, fell to 16.5 percent from 17.3 percent. Some analysts say that is a better representation of the job market than the unemployment rate

Ahead of the opening bell, Dow Jones industrial average futures rose 17, or 0.2 percent, to 9,996. Standard & Poor's 500 index futures rose 0.60, or less than 0.1 percent, to 1,062.30, while Nasdaq 100 index futures rose 6.75, or 0.4 percent, to 1,741.50.

Worries about unemployment and the economic recovery have sent stocks sliding over the past three weeks, including a plunge Thursday that took the Dow down 268 points. Investors are looking for signs that the economic rebound can be sustained. An improving jobs market would provide such relief.

The government said last week the economy grew at an annual rate of 5.7 percent during the fourth quarter. However, most of that growth came from factors that provide only a temporary boost to the economy, such as companies restocking low inventories.

The latest drop in stocks reflects concerns three members of the euro currency bloc — Greece, Spain and Portugal — will have trouble tightening budget controls to manage mounting deficits, helping to derail a recovery in Europe.

Stocks initially declined last month after China said it would rein in loose bank lending standards to cool its economy and avoid speculative bubbles. President Barack Obama's calls for tighter regulations on U.S. banks then added to investors' concerns.

Overseas markets all sold off following the sharp declines in the U.S. on Thursday.

As stocks have tumbled, demand for safer investments is rising. The dollar strengthened Friday, while Treasury bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.62 percent from 3.61 percent late Thursday.

Gold prices fell. Oil rose 18 cents to US$73.32 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 2.9 percent, while Hong Kong's Hang Seng tumbled 3.3. Britain's FTSE 100 fell 1.4 percent, Germany's DAX index dropped 1.2 percent, and France's CAC-40 tumbled 2.4 percent.

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