Disappointing jobs report sends stocks tumbling
NEW YORK — Stocks tumbled today after the Labor Department said hiring remains weak and Hungary became the latest European country to report its economy is in crisis. Interest rates dropped as investors moved their money into the safety of Treasury bonds and notes.
The Dow Jones industrial average dropped about 325 points in late afternoon trading and fell below 10,000. All the major indexes were down more than 3 percent. The concerns about Hungary pounded the euro to a four-year low.
Retailers were among the hardest hit stocks after investors bet that a weak job market would discourage consumers from spending. Financial stocks also fell sharply on concerns that borrowers would continue having problems paying their bills. Banks were further hurt by worries about their vulnerability to Europe’s increasing troubles.
The government’s May jobs report was an unpleasant surprise for investors who had grown a little more upbeat about the domestic economy the past few days. The Labor Department said private employers hired just 41,000 jobs in May, down dramatically from 218,000 in April and the lowest number since January. The news made it clear that the economic recovery isn’t yet picking up the momentum that investors have been looking for.
The government also said 431,000 jobs overall were created last month, but most of those jobs, 411,000, came from the government’s hiring of temporary census workers. The overall number also fell short of expectations. Economists polled by Thomson Reuters had forecast employers would add 513,000 jobs.
“People are looking for one turning point,” Daniel Penrod, senior industry analyst for the California Credit Union League, said of the monthly jobs report. “That’s not realistic. This growth will be much slower and more gradual than in the past.”
The unemployment rate fell to 9.7 percent from 9.9 percent in April. That was slightly better than the 9.8 percent unemployment rate economists had forecast.
The jobs report was the latest in a series of reports this week that showed the economy isn’t as robust as hoped. But investors had sent stocks higher as they bet on stronger job growth in May.
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