Stocks plunge on bad jobs report

NEW YORK – A dismal jobs report caused stocks to plunge Friday.

The Dow Jones industrial average dropped 253 points, or 2.2 percent, wiping out its gain for the week. All 30 stocks in the average fell.

No jobs were added in the U.S. last month, the government said early Friday. It was the worst employment report in 11 months and renewed fears that another recession could be on the way. The yield on the 10-year Treasury note briefly fell below 2 percent and gold jumped $48 an ounce as cash flowed into investments seen as less risky than stocks.

“It’s certainly ugly,” said Jeff Kleintop, chief market strategist at LPL Financial.

The U.S. jobs news came out midday in Europe, dragging stock markets lower in afternoon trading. Indexes in Germany and France were already sinking on news that talks between Greece and international lenders over that country’s debt crisis were breaking down. Germany’s DAX closed down 3.4 percent; France’s CAC-40 lost 3.6 percent.

The lack of hiring in the U.S. last month surprised investors. Economists were expecting 93,000 jobs to be added. Previously reported hiring figures for June and July were revised lower.The Labor Department’s report relies on data collected from surveys of households and businesses in the second week of August. That’s right after Standard & Poor’s removed the country’s AAA credit rating and fears mounted that Europe’s banking crisis could spread to the U.S.

“I’m not surprised that businesses weren’t doing too much hiring in that environment,” Kleintop said.

The Dow Jones industrial average lost 253.31 points to close at 11,240.26. The Dow gained 329 points in the first three days of the week, turning the index positive for the year on Wednesday. Its two-day drop of 373 on Thursday and Friday left it down 0.4 percent for the week.

The Standard & Poor’s 500 index fell 30.45, or 2.5 percent, to 1,173.97. Both the Dow and S&P have fallen five of the past six weeks.