Stocks plummet on jobs report
Wall Street finished a disheartening week sharply lower Friday after concerns about the health of the economy were exacerbated by a government report showing the slowest job growth in nearly two years. Steadily climbing oil prices, which topped $55 per barrel, helped push the major indexes to losses for the week.
Investors were disappointed in the Labor Department’s non-farm payroll report, which said only 78,000 jobs were created in May, down significantly from the 274,000 new jobs in April and far less than the 185,000 economists had forecast. It was the worst showing for the monthly payroll report since August 2003.
However, some investors speculated that the jobs report, along with other data this week showing a slowdown in economic growth, would prompt the Federal Reserve to halt its policy of raising interest rates sooner than expected.
“The big takeaway here is that this increases the likelihood that the Fed will move to the sidelines sooner rather than later,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “Otherwise, there are a lot of mixed signals on the economy right now, which makes it difficult to forecast.”
The Dow Jones industrial average fell 92.52, or 0.88 percent, to 10,460.97.
Broader stock indicators also lost ground. The Standard & Poor’s 500 index was down 8.27, or 0.69 percent, at 1,196.02, and the Nasdaq composite index lost 26.37, or 1.26 percent, to 2,071.43.
Oil prices rose, more than making up for a decline on Thursday, as investors feared stronger-than-expected global demand. A barrel of light crude settled at $55.03, up $1.40, on the New York Mercantile Exchange.
The climb in oil prices and increasing economic uncertainty pressured stocks throughout the week, though the markets showed surprising resistance to profit-taking earlier in the week. For the holiday-shortened week, the Dow lost 0.77 percent, the S&P fell 0.23 percent and the Nasdaq dropped 0.21 percent.
Treasury bond yields sank to their lowest levels since March 2004 in early trading Friday as the disappointing jobs report spurred more buying by investors hedging against a sluggish economy. However, those unattractive bond yields led to a selloff as the session wore on, and the yield on the 10-year Treasury note rose to 3.98 percent from 3.90 percent late Thursday.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where volume was light.
The Russell 2000 index of smaller companies was down 4.94, or 0.79 percent, at 620.30.
Overseas, Japan’s Nikkei stock average rose 0.18 percent. In Europe, Britain’s FTSE 100 was down 0.11 percent, France’s CAC-40 lost 0.51 percent for the session, and Germany’s DAX index fell 0.48 percent in late trading.