S&P 500 falls for first time this week as momentum seeps out

U.S. stocks fell in morning trading on Friday, following other markets around the world lower, amid concern that the best week for the S&P 500 in eight months may have been overdone.

Stocks have rallied sharply since Monday and had erased all their earlier losses from worries about the economic fallout from a new virus from China that's rapidly spreading. Stronger-than-expected reports on corporate profits and the U.S. economy have helped assuage the fears, as has increasing hope that central banks and governments around the world can support markets with rate cuts and stimulus.

The recent gains were so strong, however, that some market watchers caution that stocks may have gotten ahead of themselves. In the parlance of markets, some analysts said stocks had become "overbought." That's because health experts are still unsure about how far the virus will spread, how deadly it may be and how much damage it will ultimately cause the global economy.

That uncertainty overshadowed the latest encouraging data point on the U.S. economy. A government report on Friday morning showed that many more jobs were created in January than economists expected. Employers added 225,000 last month, comfortably above forecasts for 161,500 and December's pace of 147,000.

Economic reports from outside the United States, meanwhile, were more discouraging and helped lead markets lower before trading opened in New York.

KEEPING SCORE: The S&P 500 was down 0.3% from its record set Thursday, as of 10:30 a.m. Eastern time. That trims its gain for the week to 3.4 %, which would still be its best performance since June.

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The Dow Jones Industrial Average dropped 151 points, or 0.5%, to 29,225, and the Nasdaq composite was down 0.3%. Losses for each of the three indexes had been larger in the first few minutes of trading.

HEALTHY SIGN: The U.S. jobs report is usually the most anticipated piece of economic data every month, and Friday's report did not disappoint. Economists are impressed with how many jobs employers are adding, particularly more than a decade into this economic expansion.

Wages for workers, meanwhile, paint a more mixed picture. Average hourly earnings were 3.1% higher in January than a year earlier. That's a touch above December's 3% raise, but the figure has been on a general trend downward since peaking at 3.5% last summer.

VIRUS UPDATE: The encouraging report on hiring notwithstanding, the big wild card for the economy is how much damage the outbreak of a virus spreading from China will do.

The virus has infected more than 31,400 people around the world, and killed more than 630, nearly all of them in China. The director-general of the World Health Organization said Friday that a drop in the number of new virus cases for two days is "good news," but also cautioned against reading too much into that.

Chinese factories and offices are starting to reopen following an extended Lunar New Year holiday, but companies are forecasting big revenue declines due to the closure of stores, amusement parks, cinemas and other businesses.

Japan's Fast Retailing announced it has closed 350 stores, or about half of its 750 outlets in China to comply with quarantine regulations, while Toyota Motor said it was extending production stoppages at its China factories by an extra week, to Feb. 16. Nissan Motor said January sales of the company and its local partners fell nearly 12% in January from a year earlier due to the virus outbreak and the prolonged holidays.

Stocks plunge on fears virus outbreak will dent the economy

YIELDS: In a sign of the market's caution, Treasury yields fell as prices for ultra-safe U.S. government bonds rose. The yield on the 10-year Treasury dropped to 1.59 % from 1.64% late Thursday.

MARKETS ABROAD: Stocks around the world lost momentum.

In Asia, South Korea's Kospi fell 0.7%, Japan's Nikkei 225 dipped 0.2% and the Hang Seng in Hong Kong lost 0.3%.

In Europe, France's CAC 40 fell 0. 5 %, and Germany's DAX lost 0.7%. The FTSE 100 in London dropped 0.7 %.

Germany reported new manufacturing orders fell 2.1% in December and industrial production dropped 3.5% from a year earlier while France reported factory output fell 2.8%, adding to concerns over slowing growth in Europe.

WEAKENED DEMAND: The price of crude oil has swung violently in recent weeks with worries about the virus, and how much it will sap away demand for fuel because of drop-offs in tourism, travel and other economic activity.

Benchmark U.S. crude fell 31 cents to $50.64 per barrel. It dropped below $50 earlier this week, after being above $60 toward the start of the year.

Brent crude, the international standard, fell 11 cents to $54.82 per barrel.

DRILLED: The latest drop in oil prices sent energy stocks in the S&P 500 to a loss of 0.9%, the second-largest among the 11 sectors that make up the index.

Exxon Mobil lost 1%, and Halliburton fell 2%.

Energy stocks in the S&P 500 are down nearly 12% over the last month. Every other sector in the S&P 500 is up over the same time.