NEW YORK – The first full week of 2009 didn’t bring Wall Street any huge shocks, but it didn’t bring much for investors to be happy about, either.
A jump in unemployment sent stocks sharply lower Friday as investors feared that Americans won’t soon deviate from their tightened budgets. The Dow Jones industrial average fell 143 points to end the week down nearly 5 percent, its worst week since November.
For the week, the Dow ended down 435.51, at 8,599.18. The Standard & Poor’s 500 index fell 41.45, or 4.45 percent, to 890.35. The Nasdaq composite index ended the week down 60.62, or 3.71 percent, at 1,571.59.
The Russell 2000 index finished the week down 24.54, or 4.85 percent, at 481.30.
The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S. based companies – ended at 8,935.80, down 378.77 points, or 4.04 percent, for the week. A year ago, the index was at 14,120.81.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange.
The Labor Department’s much-anticipated report Friday showed employers cut 524,000 jobs in December, a smaller decline than the loss of 550,000 jobs economists forecast. But the unemployment rate jumped to a 16-year high of 7.2 percent – more than the 7 percent economists predicted – from 6.8 percent in November.
Lost jobs were not a shock to Wall Street, but the news still stung.
“People say that they know how bad the economy is. But they don’t know how it feels to have the reality hit home,” said Stu Schweitzer, global markets strategist at J.P. Morgan’s Private Bank. “It’s not the facts – it’s how the facts feel. And it feels terrible to have so many Americans losing jobs, and so many more likely to follow in the coming months.”
Rising unemployment tends to erode consumer spending, which accounts for more than two-thirds of U.S. economic activity. For all of 2008, the economy lost 2.6 million jobs – the most since 1945. Retailers have been reporting dismal holiday sales figures, and Wall Street is concerned about how long the economy will be suffering a pullback in consumer spending.
Bond prices mostly rose Friday as investors sought safety from the grim economic data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.40 percent from 2.44 percent late Thursday. The yield on the three-month T-bill, considered one of the safest short-term investments, slipped to 0.07 percent from 0.08 percent compared with late Thursday.
The dollar mostly rose against other major currencies, while gold prices fell.
Light, sweet crude fell 87 cents to settle at $40.83 on the New York Mercantile Exchange after dipping as low as $39.38.
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