Shortly after the stock market closed Thursday, a second credit rating agency warned the U.S. government that it could lose its sterling debt rating if Congress and the Obama administration don't reach an agreement to raise the nation's borrowing limit.
Moody's Investors Service said Thursday that if the parties fail to make progress soon, it would put the U.S. rating under review for a possible downgrade. That's because there's a "very small but rising risk" that the government will default on its debts.
Standard & Poor's, another major credit rating agency, issued a similar warning in April. The warning bodes ill for Friday trading which will also be influenced by the U.S. Labor Department report on employment nationwide.
Stocks closed mixed Thursday, ending a day of ups and downs on the boards pushed by weaker-than-expected sales reports from retailers and a dip in unemployment benefit applications that was less than experts had hoped.
First-time applications for unemployment benefits, an indication of how many people are losing their jobs, fell slightly last week to 422,000. That was more than economists were expecting and well above the 375,000 level that signals that the economy is adding jobs.
The Dow Jones industrial average lost 42 points, or 0.3 percent, to close at 12,249 Thursday. The S&P 500 lost 2 points, or 0.1 percent, to 1,313. The Nasdaq composite gained 4, or 0.2 percent, to 2,773.
The Thursday loss comes on top of Wednesday's loss of 280 -- the largest drop for the Dow Jones industrial average in more than a year -- were triggered by reports that suggested that the U.S. economy is slowing.
Despite what some see as dismal job figures, U.S. companies squeezed more work out of their employees in the first three months of the year. But the gain was much slower than in the previous three months, suggesting many employers will need to hire more workers if they want to produce more goods and services.
The U.S. Labor Department says productivity rose at an annual rate of 1.8 percent in the January-March period. That was slightly faster than an earlier estimate of 1.6 percent, but significantly lower than the 2.9 percent increase in the October-December period. Unit labor costs rose at a 0.7 percent rate, down from an initial estimate of 1 percent growth.
One trickle of good news is that one measure of private-sector hiring that covers summer and resort work appears to be the best it has been in five years. The U.S. Labor Department reported that metro employment data for April shows lower unemployment in 90 percent of the nation's largest cities.
The unemployment rate dropped in 339 metro areas in April, the Labor Department said Wednesday. It rose in 20 cities and remained unchanged in 13. It was the most cities to see a decline in a year.
Many of the areas with the steepest declines are tourist destinations, such as Ocean City, N.J., where hotels and tourist attractions add workers for the summer season. The metro employment data isn't seasonally adjusted for such trends and as a result can be volatile from month to month.