Weak Employment Report Rocks Wall Street

Surprisingly weak economic data sent blue chip stocks lower on Friday, but financial and technology issues strengthened.

The Dow Jones industrial average ended 28.36 lower at 4,444.39, according to preliminary results.

Advancing issues outnumbered declines by about 8 to 5 on the New York Stock Exchange, with 1,481 up, 922 down and 615 unchanged. Big Board volume totaled 365.96 million shares as of 4 p.m., up from 345.91 million Thursday.

The Dow average plunged 42 points at the open, shot back up to positive 17 but retreated a second time, spending the rest of the day in negative territory.

The sharp market moves were sparked by a Labor Department report that business payrolls shrank by 101,000 jobs in May. The report surprised economists, who had predicted a rise of about 175,000, and got investors nervous about the health of the economy going forward.

“What worries me is that the momentum of the economy may be shifting from up to down,” said Hugh Johnson, First Albany Corp.’s market strategist. “Forecasts of a bounce in earnings in the second half of this year do not look to me to be … well founded.”

Despite the job losses, the Labor Department said the nation’s unemployment rate dipped by 0.1 percent to 5.7 percent.

But in further evidence of a downturn, the Commerce Department said its Index of Leading Economic Indicators fell for the third straight month, dropping 0.6 in April. Many economists believe a three-month decline in leading indicators can signal a recession.

Some of the stocks that moved substantially Friday:

NYSE

Motorola fell 1 1/8 to 60.

The company’s Government and Space Technology Group won a Defense Department contract to design and develop a computer-based network security manager program. In addition, Motorola said it will invest $15 million in CellStar Corp.’s distribution business. Cellstar is a Motorola distributor in various locations throughout the world.

Chase Manhattan rose 1 1/8 to 48 1/8.

Citicorp rose 3/4 to 54 3/8.

BankAmerica, up 1 at 53 7/8.

First Interstate Bancorp, up 2 7/8 at 88.

Banking stocks shot higher as interest rates plunged on news of a weakening in the economy.

Digital Equipment fell 7/8 to 44 7/8.

Prudential Securities downgraded the shares to “hold” from “buy.”

Philip Morris rose 1 to 73 7/8.

The company said late Thursday that it had retrieved 75 percent of recalled cigarettes from retailers, and that the recall was proceeding as planned.

NASDAQ

Intel rose 1 3/4 to 116 1/2.

Sybase rose 3/8 to 22 3/4.

Cisco Systems rose 3-16 to 45 1/8.

Microsoft fell 1 to 83 1/8.

3Com rose 3-16 to 65 3/4.

Computer stocks, which have been market leaders for months, finished mixed after two days of recovering earlier losses.

AMEX

Jan Bell Marketing rose 5-16 to 2 7/8.

The designer and manufacturer of fine jewelry amended its agreement with senior noteholders and closed on a 2-year $30 million credit facility.