Dow falls 168 on disappointing jobs report
The sell-off comes as the government says the economy added 115,000 jobs in April, less than expected. The S&P 500 and Nasdaq suffer their worst weekly losses for 2012. Crude oil briefly falls below $98. Apple drops $16.
Stocks slumped today after the government reported only 115,000 jobs were created in April, substantially fewer than expected. The unemployment rate dropped to 8.1%, mostly due to people dropping out of the workforce.
The report heightened fears that the economy is stalling out for a third straight spring after a winter of relatively decent activity. The one offset: Payroll gains in March and February were revised higher by a total of 53,000 jobs.
The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) suffered their biggest weekly losses of the year; the Nasdaq's daily loss was its largest since November. The Dow Jones Industrial Average ($INDU) fell nearly 170 points and ended the week lower after two weeks of gains. Energy and technology stocks were the weakest market groups.
Crude oil (-CL) in New York dropped below $98 a barrel for the first time since February on the news but later pushed above that level. Gold (-GC) moved slightly higher.
The Dow closed down 168 points to 13,038. The S&P 500 dropped 22 points to 1,369, and the Nasdaq was off 68 points to 2,956, its worst daily loss since Nov. 9. The Nasdaq-100 Index ($NDX) was off 67 points to 2,638.
Article continues below.
Apple (AAPL), down $16.57 to $565.27, was responsible for 13 points of the Nasdaq-100 decline. The stock fell 6.3% on the week, giving back all of its 5.2% gain in the week of April 27. The stock is still up 39.6% for the year.
The losses in U.S. stocks came as European stocks also fell, partly due to weak reports on the services sectors in Spain and Italy and worries about how Europe will cope with its debt crisis after elections this weekend in France and Greece.
The market decline came as the climax to a week where economic news was mostly worse than expected. The swoon will probably generate more talk about whether the Federal Reserve should try another round of quantitative easing to boost the economy. Quantitative easing is basically buying in government debt to keep interest rates.
Most Fed watchers think the Fed isn't likely to act unless economic conditions deteriorate.
Berkshire earnings miss estimates
After the close, Berkshire-Hathaway (BRK.B) shares were down 19 cents to $80.75. The conglomerate controlled by Warren Buffett said first-quarter profits more than doubled because the company's insurance subsidiaries avoided major disaster losses and the paper value of its derivative contracts improved.
Berskhire earned $3.245 billion in net income, or $1,966 per Class A (BRK.A) share. That's up from last year's $1.511 billion net income, or $917 per Class A share. For the class B shares (worth about one 1,500th of the Class A shares), the earnings came to $1.31, up from 64.4 cents a share.
Revenue grew 13% to $38.1 billion from last year's $33.7 billion.
Shares fell because analysts had forecast Berkshire would report earnings per Class A share of $2,297.50 on $39.154 billion in revenue.
Berkshire holds its annual meeting in Omaha, Neb.
|Markets for the week|
|5/4/2012||4/27/2012||% chg.||YTD chg.|
|U.S. Dollar Index||79.25||78.76||0.62%||-1.59%|
The jobs report is a downer
The consensus among economists was that the jobs report would show a gain of some 160,000 jobs. Didn't happen. There were drags in construction, government, professional services, leisure and transportation. Government employment (federal, state and local) has dropped 215,000 in the past year.
Residential construction employment fell 2,500 to an estimated 566,000. The sector has lost 456,400 jobs since the peak in 2006. The number has changed very little since bottoming in November 2010.
There were decent gains in retail and temporary employment. Manufacturing gained 16,000 jobs -- and 170,000 jobs since October.
The most discouraging part of the report were contained in what's called the household survey, from which the unemployment rate is derived.
Yes, the rate fell to 8.1% from 8.2% in May, but the number of people employed fell by an estimated 169,000 in April as the number of unemployed actually fell by 173,000. The labor participation rate hit 63.4%, a rate not seen since 1982. The participation rate measures the how many people are working or looking for work compared with the potential work force.
Part of the decline is due to demographics. People are aging and retiring. Part of the decline is the continuing effect of the Great Recession.
So, what happened? The warm winter accelerated hiring in construction and other industries that otherwise would have slowed, wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. The run-up in gas prices in the early part of the winter, built on speculation of an outbreak of hostilities with Iran, then caused employers to dial back their hiring plans.
What's next? "We look for a better but still subdued pace of job creation in the 150,000-200,000 region over the rest of the year," wrote Nigel Gault of IHS Global Insight.
Crude oil takes a dive
Crude oil settled off $4.05 to $98.49 a barrel after dropping to as low as $97.51. Brent crude settled down $2.90 a barrel to $113.18 a barrel after falling to as low as $111.76. The retail price of gasoline was off slightly to $3.802, according to AAA's Daily Fuel Gauge Report. The arrprice has fallen 13.4 cents, or 3.4%, since peaking at $3.936 a gallon on April 6.
Energy shares were off sharply as a result.
Exxon Mobil (XOM) fell $1.08 to $84.57. Chesapeake Energy (CHK) was a rare winner, up 20 cents to $17.39.
Airline shares were higher as oil dropped. United Continental Holdings (UAL) was up 71 cents to $22.28. But Southwest Airlines (LUV) was off 12 cents to $8.10. Reason: The airline's famed interest in hedging its fuel costs could backfire if fuel prices really slump.
Gold, meanwhile, settled up $10.40 to $1,645.20 an ounce. Silver (-SI) rose 42.2 cents to $30.43 an ounce. Copper (-HG) slipped 1.5 cents to $3.721 a pound. Gold fell 1.2% for the week, with silver off 2.9%. Copper fell 2.6% for the week.
The worries about Europe pushed the dollar higher.
Interest rates were lower, with the 10-year Treasury yield falling to 1.88% from 1.924% on Thursday.
|Energy prices -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|Crude oil (-CL)||$98.49||$102.54||-6.08%||-0.34%|
|Heating oil (-HO)||$3.0088||$3.0869||-5.51%||3.25%|
|Natural gas (-NG)||$2.279||$2.3400||-0.26%||-23.75%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.9748||$3.0500||-4.76%||11.98%|
|(per gallon; AAA)|
A frustrating week for stocks
The Dow and the S&P 500 suffered their worst declines since March 10. Moreover, the Dow's 1.44% loss was its second-worst week of the year, after a 1.6% decline in the week of April 9.
The S&P 500 and Nasdaq suffered their biggest weekly losses of 2012, down 2.4% and 3.7%, respectively. To make the situation more galling, the Nasdaq's percentage loss today is its worst of the year.
The losses were broad; of 44 domestic indexes that Market Dispatches tracks, 41 were lower. The only winners: gold mining, airline and utilities stocks. Newmont Mining (NEM) was up 57 cents to $46.16. But Freeport-McMoRan Copper & Gold (FCX) was off 47 cents to $36.40.
All 30 Dow stocks were lower. The best percentage performer, relatively speaking, was Procter & Gamble (PG), down 23 cents to $64.28. The laggard was Bank of America (BAC), down 26 cents to $7.74.
Some 42 S&P 500 stocks were higher, led by medical-instrument maker Carefusion (CFN), up $1.29 to $27.09, and Centerpoint Energy (CNP), up 33 cents to $20.05.
MicronTechnology (MU), up 8 cents to $6.55, was the sole gainer among Nasdaq-100 stocks. Micron gained on reports that it has won the bidding for failed Japanese chip-maker Elpida.
Green Mountain Coffee Roasters (GMCR) had rallied in the morning but finished down 77 cents to $25.10. The stock had found initial support from a leaked memo from Starbucks (SBUX) CEO Howard Schultz that his company will sell two new varieties of coffee for use in Green Mountain's Keurig brewers. "Starbucks K-Cups continue to see robust gains," Schultz wrote.
Yahoo (YHOO) fell 25 cents to $15.15 after a major shareholder disclosed an inaccuracy in CEO Scott Thompson's resume and demanded his ouster. Daniel Loeb noted that Thompson claimed a degree in business and computer science from a college that didn't offer a computer science degree until four years after Thompson graduated.
|Short hits from the markets -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0700%||0.080%||-22.22%||600.00%|
|5-year Treasury note||0.784%||0.817%||-3.33%||-5.54%|
|10-year Treasury note||1.880%||1.924%||-1.83%||0.48%|
|30-year Treasury bond||3.071%||3.112%||-1.22%||6.30%|
|U.S. Dollar Index||79.587||79.293||0.94%||-1.16%|
|(in U.S. $)|
|U.S. $ in pounds||£0.619||£0.618||0.54%||-3.82%|
|Euro in dollars||$1.31||$1.32||-1.14%||1.07%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.764||€ 0.760||1.15%||-1.06%|
|U.S. $ in yen||80.00||80.20||0.00%||3.76%|
|U.S. $ in Chinese||6.33||6.30||0.42%||0.03%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$98.49||$102.54||-6.08%||-0.34%|
"The consensus among economists was that the jobs report would show a gain of some 160,000 or so jobs. Didn't happen"
There are no "experts" on what's going to happen but rather a bunch of over educated people who get paid to spew forth their opinion. Maybe the truth is finally kicking in and the reports are finally revealing the truth of our economy...it sucks!!
Wait...listen very carefully......turn off the TV......put your ear to the ground...yup sure as shootin that faint sound you hear is that summer of recovery making its presence felt again.... whoops no....sorry, that sound was a fracking operation somewhere in North Dakota where their seems to be plenty of jobs. Guess BO will do his best to shut that down next in his plan to rule the world
Progressive=Communist=Socialist=Liberal=End of the USA if we dont rid us of them
Stock Market should be about 9,000 and the true unemployment should read about 10% at least. Underemployment and people who have given up on jobs is at least another 10%
Those numbers are much closer to the truth, and obame and all is Zars LIE and CHEAT
There real UE is more like 24%.Odumos D.O.L does not count people whose UE benifits run out,as a matter of fact when their UE BENIFITS run out they magically count as employed, in the odumbo world
I love the new Obama math: Thousands of overall jobs lost yet the unemployment rate drops! LMFAO!!
BTW, who the hell knows how many people quit looking for work? About 90% of job searches are done thru the net now. There is no way these figures are close to being accurate. The real rate is 17%. Thanks God the worst prez in US history will be gone in a few months.
Yep ole President Obama must be right. The economy is getting better. Yep' Yep' These stocks constantly falling on jobless report today but rebounding tomorrow on a different look on the jobless. Everything dropping because of a problem with Europian economy but oh no the next day their central bank is going to step in. Oh no, Spain is in trouble one minute but oh no again someone or something steps up to say they will help them out.
Let's face it we are getting shafted not only by those that are controlling the markets (those that have the most) as our own government has and is still screwing things up. Let's face it we are headed to a two class society. Those that have and those that don't.
your sources are government entities that lie and alway revise their numbers everytime scince odumbo stepped into office. google is a nice tool(real unemployment)facts are there are 7 million less employed people scince odumbo took office try to spin it anyway you want, you can get these numbers from a government website
How can anyone believe any of the numbers that are being put out by the government anymore. Every number they give is revised and then re-revised. The unemployment rate is anywhere from 8.1% to 20% depending on where it is comming from.
If the fed keeps up with the QE the dollar will be worthless.
Hold on folks I am going to shock you:
All Politicians lie to us: reason is no one will vote for a person if they tell the truth that solutions for big problems are complicated and take time
Politicians create short term band -aid solutions : reason is when they run again for office no one will vote for a politician whose claim to fame is that things will be better 10 years from now.
Jack Nicholson said it best in the movie: You want the truth , you can't handle the truth
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