Unemployment Rate Goes Down. Stocks End Flat.

The U.S. jobless rate dropped to a 2.5 year low at 8.6 percent. This drop in unemployment supported the view that the U.S. economy most likely will avoid another recession. Some analysts said that the drop in the unemployment rate might be evidence that the recovery is, finally, gaining momentum.

The U.S. government said that the economy created 120,000 jobs last month. Last week, on Thursday, it was also reported that U.S. manufacturing activity was at its highest level in five months. Europe, however, keeps battling its debt crisis. As a result, last Friday, the Euro fell against the dollar (as low as $1.33630) for the first time in five sessions.

Reuters reported over the weekend that last Friday world stocks registered their biggest weekly advance since March 2009. U.S. stocks also had their best week since march 2009. The benchmark was Standard & Poor’s 500, and it was up 7.4 percent for the week. Gold also was on the rise last week. It posted its largest weekly gain in over a month. However, U.S. stocks gave up most of the 1-percent gains that were posted earlier in the session.

Overall, much caution still remains in the markets. So what’s ahead this week? Markets again will be watching Europe closely. European leaders are supposed to address their sovereign debt crisis and offer a possible resolution.