Dow plunges 275 on disappointing jobs report
The blue chips go negative for 2012 as stocks suffer their worst day in at least 7 months, as payrolls grow less than half of estimates. The unemployment rate rises to 8.2%. Crude oil drops below $84. Gold moves higher. May auto sales disappoint.
Updated: 6:21 p.m. ETStocks dropped sharply today, with the Dow Jones Industrial Average ($INDU) going negative for the year, after the Labor Department said the national unemployment rate rose to 8.2% in May and payroll employment growth fell dramatically.
The economy created just 69,000 new jobs in May, down from 77,000 in April and 143,000 in March. The payroll gains were much less than the consensus estimate of 150,000. Worse, the payroll gains for April and March were cut by a total of 49,000 jobs. In a note to clients, Ian Shepherdson, chief U.S. economist of High Frequency Economics, summed up the report in three words: "This is horrible."
There was renewed speculation that the Federal Reserve might try new measures to stimulate the economy, although Chairman Ben Bernanke and others have said they wouldn't move unless the economy shows truly serious deterioration.
It's questionable if today's jobs report meets that standard. The Institute for Supply Management's May index on manufacturing missed estimates slightly but suggested more strength in the economy than the jobs reports indicates. Automakers were reporting decent May sales, although the results were generally below Wall Street estimates.
The Dow closed down 275 points to 12,119. The index ended the day down 0.8% for 2012. The Standard & Poor's 500 Index ($INX) was off 32 points to 1,278; it's still up 1.6% for the year. The Nasdaq Composite Index ($COMPX) was off 80 points to 2,747 but remains up 5.5% for the year. The losses were the third in a row for the indexes and the worst point losses for the Dow and S&P 500 since Nov. 1. The Nasdsq had its biggest loss since Sept. 22.
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The Nasdaq-100 Index ($NDX), meanwhile, was down 66 points to 2,459. The index is heavily influenced by Apple (AAPL), which was down $16.74 to $560.99, subtracting 14 points from the index by itself. Facebook (FB) was down $1.88 to $27.72.
Interest rates were lower, as investors around the world sought safety in bonds. The U.S. 10-year note yield fell to 1.467% from Thursday's 1.58%. The German 10-year bond was yielding 1.172% after falling to as low as 1.172%.
Late today, ratings company Egan-Jones downgraded Italy's credit rating to B+ from BB. It's not clear how much effect the move will have on markets.
Financial stocks are hit
Financial stocks were the weakest sector of the S&P 500, down more than 3.7% overall. All 10 sectors of the index were lower. Bank of America (BAC) was down 33 cents to $7.02. JPMorgan Chase (JPM) dropped $1.22 to $31.93.
Utility stocks were the best performers. The Dow Jones Utility Average ($UTIL) was off just 4 points to 464.
The Dow has now fallen 8.74% since peaking on May 1. The S&P 500 is off 9.94% since its peak of 1,419 on April 2, though it remains up 2.1% for the year. The Nasdaq has dropped 12% since peaking on March 26. Its gain has been cut from 20% to 5.5%. A loss of 10% or more is the popular definition of a correction.
If you look at the declines from intraday highs reached this winter, the S&P 500 and Nasdaq are both in corrections, down 10.1% and 12.3% respectively. The three indexes ended the day below their simple 200-day moving averages, a key measure of investor confidence.
At the same time, the three indexes are oversold if measured by their relative strength indexes. That means a rally could be near -- if the right trigger emerges
| Markets for the week | ||||||||||||
| 6/1/2012 | 5/25/2012 | % chg. | YTD chg. | |||||||||
| Dow Industrials | 12,118.57 | 12,369.38 | -2.03% | -0.81% | ||||||||
| S&P 500 | 1,278.04 | 1,295.22 | -1.33% | 1.63% | ||||||||
| Nasdaq | 2,747.48 | 2,778.79 | -1.13% | 5.46% | ||||||||
| Russell 2000 | 737.43 | 747.21 | -1.31% | -0.47% | ||||||||
| Crude oil | $83.23 | $90.86 | -8.40% | -15.78% | ||||||||
| (per barrel) | ||||||||||||
| U.S. Dollar Index | 82.97 | 82.52 | 0.55% | 3.04% | ||||||||
| 10-yr. Treasury | 1/0/1900 | 1/0/1900 | -15.93% | -21.59% | ||||||||
| Gold | $1,622.10 | 1,568.90 | 3.39% | 3.53% | ||||||||
Warm weather, Europe and China may be hurting US jobs
Unseasonably warm weather, which brought forward hiring into the winter months, was probably the reason that March and April employment gains proved smaller than originally thought.
May's paltry growth is another question.
Today's jobs report contained a number of worrisome elements. Over the last three months, the economy has added 96,000 jobs a month, compared with 250,000-plus in December, January and February. The average workweek fell slightly; average weekly earnings were up just 0.1%.
The payroll survey -- the one from which the unemployment rate is derived -- was stronger, with total employment up 422,000.
Part-time employment, however, accounted for all of the gain and then some. And the alternative measure of unemployment, which includes the traditional measure plus those who have given up or are working part time because they can't find full-time employment, rose to 14.8% from 14.5% in April. It's still down from 15.4% a year ago.
"While this report hardly qualifies as a disaster, it does confirm that there's a real slowdown under way, and not just some weather-related quirks," said Philippa Dunne and Doug Henwood of the Liscio Report, a newsletter that tracks state finances.
What's not clear is the cause. Most economists believe it is worry that Europe's worsening problems will spill over to this country.
"Some had believed that we had decoupled from China slowing and all the problems in Europe, but that seems to be short-sighted," Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pa., told Reuters.
The report came as stocks in Europe plunged after the European Union's statistics service said unemployment in the eurozone nations hit 11%.
Manufacturing activity declined across the continent, with activity in Spain, France, Greece and even Germany hitting three-year lows. China also contributed to the day's distress after two reports on manufacturing showed growth continuing to slow.
Manufacturing in the United Kingdom also fell back.
European nations have been struggling with a tottering banking system. Spain's largest banks are largely wards of the state, and a big issue now appears to be finding a eurozone-wide mechanism to insure bank deposits as completely as the Federal Deposit Insurance Corp. does in the United States.
Crude oil drops, but gold rises
Crude oil (-CL) settled down $3.30 to $83.23 a barrel, potentially its lowest price since Oct. 7. It had traded as low as $82.70. Brent crude, the benchmark North Sea oil, fell to $98.43 a barrel, down $3.44. It was the first close below $100 for Brent since Oct. 4 and its lowest close since January 2011.
Crude in New York is off more than 15% this year and 26% since peaking at $109.77 a barrel on Feb. 24. Brent has fallen 22% since peaking on March 1.
Energy shares were lower as oil dropped. Exxon Mobil (XOM) was down 71 cents to $77.92. Chevron (CVX) dropped $1.90 to $96.41. Schlumberger (SLB) fell $1.18 to $62.07.
The national average retail price of gasoline fell to $3.611 a gallon today, according to AAA's Daily Fuel Gauge Report, from $3.626 on Thursday. Gasoline is still up 10% for the year but down 8.3% from a peak of $3.936 in early April.
Gold (-GC), however, jumped $57.90 to settle at $1,622.10 an ounce. Silver (-SI) closed up 75.5 cents to $28.51 an ounce, and copper (-HG) rose 5.2 cents to $3.3135 a pound.
The euro, however, moved higher against the dollar, trading at $1.24285, up from Thursday's $1.2364. It had traded as low as $1.23183.
| Energy prices -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $83.23 | $86.53 | -3.81% | -15.78% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.6279 | $2.7032 | -2.79% | -9.82% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.3260 | $2.4220 | -3.96% | -22.18% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.6568 | $2.7227 | -2.42% | -0.02% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $98.71 | $101.87 | -3.10% | -8.07% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.6110 | $3.6200 | -0.25% | 10.23% | ||||||||
| (per gallon; AAA) | ||||||||||||
Auto stocks fall as strong sales actually disappoint
Auto sales were good. They were very good. But not good enough for Wall Street.
Shares of most automakers, including Ford Motor (F), Toyota (TM), Honda Motor (HMC) and Nissan (NSANY), were all lower this afternoon as automakers reported May sales.
GM deliveries last month rose 11% to 245,256. Toyota's sales surged 87% to 202,973, Chrysler's climbed 30% to 150,041 and Nissan's increased 21% to 91,794.
But the consensus estimates ahead of the reports were for gains of 15% by GM, 93% by Toyota, 40% by Chrysler and 29% by Nissan.
Volkswagen's (VLKAY) U.S. sales so far in 2012 are the company's best since 1973. But shares fell $1.12 to $29.01.
Overall, sales in May ran at a seasonally adjusted annual rate of 13.8 million units, according to market-research firm Autodata. This is the first month since December that the sales rate has been under 14 million units. But before you panic, deliveries for May were up 25% from a year ago and 12.7% from April.
GM shares moved up briefly but ended down 19 cents to $22.01. The company said today it plans to offer a lump-sum payment to about 42,000 current retirees to invest as they see fit. Those who don't accept will get their pensions via a group annuity purchased through Prudential Insurance. The move is expected to cut GM's pension obligations by some $26 billion.
Wal-Mart is the best Dow performer; gold stocks jump
None of the 30 Dow stocks finished in the black today. The best performer was Wal-Mart Stores (WMT), down 27 cents to $65.55.
The laggard was Hewlett-Packard (HPQ), down $1.43 to $21.25 after Jeffries analyst Peter Misek said the company's restructuring efforts weren't enough to offset weak sales in Europe and declining personal-computer and printer sales.
Only seventeen S&P 500 stocks were higher, along with just two Nasdaq-100 stocks.
Gold miners had a big day. Newmont Mining (NEM), the largest U.S. gold producer, was the S&P 500 leader, up $3.14 to $50.30. Randgold Resources (GOLD) was the Nasdaq-100 leader, up $7.91 to $87.26. Duke Energy (DUK) was second among S&P 500 stocks; Infosys (INFY) was the second Nasdaq-100 stock that finished with a gain.
Homebuilding stocks were among the day's biggest losers. PulteGroup (PHM) fell $1.10 to $8.26.
| Short hits from the markets -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0700% | 0.070% | 0.00% | 600.00% | ||||||||
| 5-year Treasury note | 0.620% | 0.671% | -7.60% | -25.30% | ||||||||
| 10-year Treasury note | 1.467% | 1.581% | -7.21% | -21.59% | ||||||||
| 30-year Treasury bond | 2.540% | 2.672% | -4.94% | -12.08% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 82.973 | 83.129 | -0.19% | 3.04% | ||||||||
| British pound | 1.5368 | 1.5411 | -0.29% | -1.09% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.651 | £0.649 | 0.29% | 1.10% | ||||||||
| Euro in dollars | $1.24 | $1.24 | 0.46% | -4.16% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.805 | € 0.809 | -0.46% | 4.34% | ||||||||
| U.S. $ in yen | 78.31 | 78.37 | -0.31% | 1.57% | ||||||||
| U.S. $ in Chinese | 6.39 | 6.36 | 0.16% | 1.04% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $0.962 | $0.969 | -0.68% | -1.96% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $1.040 | $1.032 | 0.69% | 2.00% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,622.10 | $1,564.20 | 3.70% | 3.53% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.314 | $3.366 | -1.55% | -3.57% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $28.5120 | $27.7570 | 2.72% | 2.14% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.1225 | $6.4375 | -4.89% | -6.20% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $5.5150 | $5.553 | -0.68% | -14.69% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.6885 | 0.7185 | -4.18% | -24.90% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.5985 | 1.6295 | -1.90% | -30.39% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $83.23 | $86.53 | -3.81% | -15.78% | ||||||||
| (per barrel) | ||||||||||||
Democrats vs Republican, Christian vs non Christian, one Color vs another color, race vs race, east vs west, north vs south, gay vs non gay, right vs left, birth vs non birth - that about covers everyone....lets see...who else can we blame? Who else can we pit against another. Keep them occupied with all of the BS and they won't begin to look at what we're really doing - ANYWHERE. United - we stand. Divided - we fall. Lets see? Are we going up or down? I can't tell for all of the issues that have no business being issues. President Carter campaigned (word for word) on the exact same platform that FDR ran on - not knocking Democrats - but the point is FDR ran what 75 years ago? And we still - Democrats and Republicans - have not solved or improved one single item on that list. And that is because - listen closely - the parties don't run this country. Greed, dishonesty, power and control have NO loyalty to anything, neither religion nor political party nor issue. These beliefs and way of life live in every creed, religion, politcal alliance and party office. The politicans do not run this country and haven't in so long they forgot what true leadership was - special interest buys votes, politicians and political parties and if you believe anything different take a look at the biggest salaries in Washington DC, the pork barrel politics that sell out to the bigest bidder (both parties, all religions), the freebies handed out by big business to 'buy' or sway votes. Throw some more issues out and create diversions so that we can get back to the real business of gaining power and control so we can get richer and buy more and have more houses, more toys, more money and die the riches man on earth. Tell me - in all honesty - what difference does it make to you whether I am gay, had an abortion, got divorced, lived in mixed relationship, go to Budhist meetings or Christain church vs the ONE true church (the one you believe in) or belong to the tea party rather than the democratic or republican? I am the one who must face my God. I don't tell you (nor do I try to force the federal government to regulate) not to eat eggs on Wednesday, pray only at noon on Tuesday and that MUST be on your knees at the end of the bed so as not to appear either right wing or left wing, wear only red four times a week and black the rest, marry the person your parents choose and make love only once a night right after you go to bed and only on Thursday so as not to infringe on everyone's sabbath, don't leave your dirty laundry on the bathroom floor, you must not use any birth control and must pay every expense for your house hold and mine no matter how extravagant or unrealistic mine are, you can only drive my type of car, live outside my neighborhood..................
Can I get an answer to one question- When is it Obama's ecomomy?
You idiots out there that blame Bush for everything need to let us know when the time line is crossed for Obama to take responsibility for his part of this mess. If you think Obama has done a good job leading our country please pass me the stuff your smoking as it must be excellent 60s type stuff.
people claim to be so intelligent,
i would like to know when they are going to be required to provide society proof of their claims instead of spewing stupidity pawning it off as intelligence.
no economy will ever succeed when that society wants to place all their values in all the wrong places,
when the only people in this economy getting what it takes to live what most people could live on but then they claim to be worth so much more as they then cry and complain about the people they expect to get their wages from are too expensive for them,
if you can't afford to live on what you offer for those willing to do the work you want done,
why should they be expected to live on that insult?
the accusations of entitlement are being thrown at the wrong group of people in society,
people who have worked for decades working a trade get accused of crying for entitlement as they can expect no where near what the clowns fresh out of college claim to be worth because of the few years of drunken dorm and spring break parties,
then the idiots fresh out of college get into the money market playing around with the working claases retirements and social security in the stock market, wasting it all away then claiming it wasn't their fault that they lost it all, it was still the working classes fault because they didn't invest.
OOOH NOOO BAAAAAMAAAAA Don't worry the righteous one will fix it.....NOT! This problem is far more outreaching than we care to appreciate. Less government, fewer taxes, more incentives, less regulation, we must EMBRACE the free market and let our Country do what it does best...PROSPER! We need a significant changing of the guard with those who are NOT afraid to do what is right for this Country even if it means they piss a few people off.
"Are you serious??"
Kanrai, You Libs. sure are lacking in the sense of humor department. Obama is the most successful President this Country has ever had in creating the perfect storm for a economic crash. You are right the Dems. can be given credit for their part in setting the stage back in "05" and "06", Dodd, Frank, Pelosi, Reid etc. but Obama has followed his Marxist Socialist Training to ensure the free fall continues.
I always said from 2008 instead of bailing out GM, Ford, Chrysler and all the banks give the money to the tax payers probably $50-100K each and let us buy a home or pay ours off, buy a new car or pay off our old car loan. The money would re-circulate back to the banks and they should be happy with everything being paid off. Then the economy would be bustling as the smart ones who are still up to date and paying their mortgages on time wouldn't be upside down in their properties. Obama hasn't helped any good paying tax payer, citizen or vet. Did he send out any stimulas checks your way? Are you financially OK or worry about filling up your gas tank for work, thinking we might not be able to buy enough groceries for the family this week? I hope this Nov you vote for the right guy. I can't do this for another 4 years as Obama hasn't given anyone any hope. At least we have a better chance with Romney or he's going out in 4 years.
Obama tells us we have to all sacrifice. I wish I could sacrifice two weeks a year in Honolulu or send my wife off shopping to Paris and Madrid with my daughters. Must be nice. People don't forget and I think there are more people thinking about this and will vote him out.
... wow, lots of pretty stupid people here ..... many of us who make less than $60K a year have money invested in 401's and keogh which are in the stock market .... if it crashes like all you misfits want YOU will be cheering to kill our future retirement and will now look to you to help us survive our "Golden Years"
Just goes to show that most people have no clue in what they are talking about .... but just spew crap since they are not intelligent enough to be educated in reality.
Not everyone in the stock market are million and billion aires ........
America has been a mess for 45 years. Democrats blame Bush, Republicans blame Obama but we should all be looking at ourselves. We have the power to change things support local small business buy American made products. Stop shopping at big box stores that sell Chinese junk. Get involved in local politics and vote in every election, heck maybe even some of us regular people should try running for a national election and not just the 1%'ers. Imagine if we vote every incumbent out of office in November then maybe Washington would get the message.
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