Stocks tumble as jobless rate climbs to 9.2%
The US economy gained only 18,000 jobs in June, missing expectations for 80,000. Global markets fall. The price of gold spikes.
By Melinda Peer, TheStreet
Updated at 12:48 p.m.
Stocks were losing roughly 1% as a disappointing June jobs report had investors feeling less confident in the economic recovery.
The Dow Jones Industrial Average ($INDU) was down by 113.1 points, or 0.9%, at 12,606. The S&P 500 ($INX) was lower by 14.5 points, or 1%, at 1,338, and the Nasdaq ($COMPX) was falling by 26.3 points, or 0.9%, at 2,846.
The U.S. economy only added 18,000 jobs in June after gaining 25,000 jobs in May, according to the Labor Department's report, which was well below the increase of 80,000 that the market had been expecting. The private sector added 57,000 payrolls, missing projected additions of 110,000, according to Briefing.com. The unemployment rate was also disappointing, rising to 9.2%, even though economists had expected it to hold steady at 9.1%.
Average hourly earnings were unchanged in June and the average workweek dipped to 34.3 hours, from 34.4 hours, previously. Manufacturing industries saw a 0.3% decline in weekly hours, suggesting minimal growth in industrial production during the month.
The market took the June’s lower-than-expected job growth particularly hard after data from Automatic Data Processing on Thursday showed that the private sector added 157,000 payrolls in June – more than double what economists had been expecting – leading some market watchers to increase their expectations ahead of Friday’s report.
The disappointing news curbed investors’ risk appetites, triggering a flight to quality.
The benchmark 10-year Treasury rose 12/32, diluting the yield to 3.016%.
Gold for August delivery was up by $11.50 at $1,542.10 an ounce.
Meanwhile, the August crude oil contract was shedding $2.43 to trade at $96.24 a barrel.
”The June jobs report was, in a word, horrible,” said Geoff Somes, senior economist at State Street Global Advisors.
“’Disappointed’” is really the key word for the marekt here. I was looking at expectations going into the report and one survey had expectations for job growth of 105,000. I thought that was a little bit rich. The ADP print yesterday helped lift those expectations. However, given what we’ve seen in jobless claims over the past couple of weeks, we were ripe for a disappointment. That said, even though I was expecting a disappointing number, I still wasn’t expecting something as weak as job growth of 18,000,” he said.
”We’re clearly seeing signs that the soft patch that started in the spring has persisted into the early summer as well.”
The disappointing U.S. jobs figure and renewed concern about Italy’s financial stability weakened European markets. Shares of Italian bank UniCredit dropped amid fears that Italy may be the next eurozone country to struggle with its sovereign debt obligations, according to a Wall Street Journal article.
The euro fell 0.9% against the dollar, which was trading 0.5% higher against a basket of currencies, according to the dollar index. The FTSE in London was shedding 1%, and the DAX in Frankfurt was declining by 0.9%.
Earlier, Hong Kong's Hang Seng added 0.9%, and Japan's Nikkei gained 0.7%.
The Department of Commerce said wholesale inventories gained 1.8% in May after rising 1.1% in April. The level was stronger than the growth of 0.9% that economists had been expecting, according to Briefing.com.
Market breadth was overwhelming negative and volume was light. Of the 79% of the 687 million shares changing hands on the New York Stock Exchange trading to the downside while only 19% of shares were rising. There were 8 million shares trading on the Nasdaq..
Shares of capital goods, conglomerates and financials were showing the steepest losses with Caterpillar (CAT), General Electric (GE), Bank of America (BAC) and American Express (AXP) were among the Dow’s biggest laggards.
Investors were favoring safer bets with consumer staples, utilities and healthcare stocks showing the mildest losses.
Merck (MRK) was the only component trading in positive territory. Pfizer (PFE) and consumer staples like Procter & Gamble (PG), Coca-Cola (KO) and Kraft Foods (KFT) were showing some of the mildest losses.
Bank of America (BAC) agreed to sell its Balboa Life insurance business to Securian Financial for an undisclosed sum, according to the Financial Times. The move comes as banks are shedding extraneous units to focus on their core retail and commercial banking businesses amid new regulatory rules that will raise capital requirements for the largest banks. Bank of America's stock was losing 2.1% to $10.69.
ING Group (ING) agreed to sell its car leasing division to BMW for 700 million euros, or $1 billion. The Dutch financial services company said the sale will result in a capital release of roughly 530 million euros and add 17 basis points to ING Bank's Tier 1 ratio.Shares of ING were shedding 2.3% to $11.95.
Former News of the World editor Andy Coulson was arrested over the reporting scandal that allegedly included phone hacking and illegal payments to officers for confidential information. The case has resulted in the closure of News Corp.'s (NWSA) publication, and British Prime Minister David Cameron has called for a full public inquiry into the matter.
The number one problem with the economy is the housing market (or lack thereof), and our political leaders are unable to fix it. They've already tried bribing people to buy houses, and interest rates are at historical lows. Until the inventory of foreclosures and short sales is flushed out of the system, the economy will continue to suck.
Politicians love to play the blame game, but the truth of the matter is that both parties are equally at fault, along with numerous others. The true cause of the housing crash was a perfect storm of politicians attempting to "expand" home ownership to people who couldn't qualify for a home loan, speculators who drove prices to ridiculous levels in some markets, greedy and crooked realtors, loan officers, appraisers, and bankers, and regulators who looked the other way. And now we're all paying the price for the trillions of dollars removed from the economy.
That said, I'm ready to start my weekend.
We, the sheep, are told that our cost cutting needs to focus on the big stuff and that all the goofy things we hear about are just drops in the bucket. Things like monuments to cowgirls, studies on the habits of foreign prostitues, etc. are just not worthy of attention. A million here and a million there or even a billion here and a billion there is insignificant. So americans are told that we have to cut "entitlements", where the big money is. Let me suggest one thing: take the budget and cut all the crap out of it first, then come to the american people and show us what is left. I'm sure there will be large cuts still needed, but they will be much more palitable.
Oh, and one last thing. I would appreciate it if the political rhetoric properly labeled things that will be cut. Social Security for example is called an "entitlement". Hmmm..... I don't remember being asked to have money taken out of my paycheck for the last 40 years for my socical security contributions. I recall being told it was coming out of my paycheck. Now when and if I ever get to receive benefit checks, I will be told it is an "entitlement" given to me by the government. How about we do this you mangy bastards: give me all my contributions back with appropriate interest and we'll call it even. Then you won't need to "give" me a damn thing.
The gain of 18,000 jobs in June was even weaker than the 25,000 added in May, according to the Labor Department's report -- well below the increase of 80,000 that the market had expected. The private sector added 57,000 workers, missing projected additions of 110,000, according to Briefing.com. The unemployment rate was also disappointing, rising to 9.2%, even though economists had expected it to hold steady at 9.1%.
What we NEED is less of Obamunism, and MORE of Marco-Rubioism...
Sen. Marco Rubio (R-FL) said on the Senate floor.
We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. Then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again. That's what we should be focused on, and that's what we're not focused on.
You look at all these taxes being proposed, and here's what I say. I say we should analyze every single one of them through the lens of job creation, issue number one in America. I want to know which one of these taxes they're proposing will create jobs. I want to know how many jobs are going to be created by the plane tax. How many jobs are going to be created by the oil company tax I heard so much about. How many jobs are created by going after the millionaires and billionaires the president talks about? I want to know: How many jobs do they create?
Big-D, according to most sources the all 3 Wars, (2 of W, 1 of Obama), and not topped 1.4 trillion yet. It is interesting to note that the Wars have increased in cost from a high of 128 Billion / year under W to 142 Billion this year. Libya is still under 2 billion so far.
All three wars over the last decade have not equalled Mr. Obama's domestic spending deficits for this year.
We must CUT up Mr. Obama's credit card...
Sad as it sounds, laying off gov employees is 3 or 4 times more "deficit efficient" than laying off private sector employees.
My guesstimate for the jobs number - 115,000 created and a rate of 9.1%, and that's based on, well, uh, um, Ok, it's just a guess, at least I admit it, unlike all the analysts and economists.
don't forget the company matches that SS tax money. there's a LOT of money going into the pool. hardly an entitrlement to get some back
I would appreciate it if the political rhetoric properly labeled things that will be cut. Social Security for example is called an "entitlement". Hmmm..... I don't remember being asked to have money taken out of my paycheck for the last 40 years for my socical security contributions. I recall being told it was coming out of my paycheck. Now when and if I ever get to receive benefit checks, I will be told it is an "entitlement" given to me by the government. How about we do this you mangy bastards: give me all my contributions back with appropriate interest and we'll call it even. Then you won't need to "give" me a damn thing.
You seem to be under the delusion that a business owes you anything. If you don't like the wages offered, I suggest you start your own business. Business exists to make a profit. Failure means you close up and layoff everyone, including yourself.
This idea of yours that corporations exist to share their profits with workers is nonsense. These profits belong to the shareholders of said business. If you want to share in the profits of most companies buy SHARES. And if you hate management, buy shares and vote against them.
But, no company owes workers anything. This is not a slavery environment, the Republicans did away with that Democrat idea under Lincoln. I cannot force you to work for me. You are free to leave anytime. I aways laugh at unions. If they were so good, they would quit en-mass and start their own company. And they probably would be bankrupt the first week...
You cannot Borrow, Tax, Spend or Debase your way to prosperity, no matter what "57 states" and the Donkeys preach...
The problem is we are governed by low life politicians on both sides. The Democrats are dominatied by fringe thinking nuts that spend money to push social issues that are in conflict with the core values of the majority of americans. The Republicans dominated by high living aristocrats that want to cut medicaid, medicare and social security while they have no comprehension of the devastating personal results of such on millions of our least fortunate citizens because most of them have never experienced anything but a privileged lifestyle. While these are generalizations, they aren't far off the truth.
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[BRIEFING.COM] The S&P 500 (-0.1%) began the session on a slightly higher note before joining the Dow Jones Industrial Average (-0.3%) in the red. Most notably, the price-weighted Dow has been pressured by Boeing (BA 127.40, -2.34), which trades lower by 1.8% despite beating earnings estimates.
On the upside, the health care sector (+0.8%) trades ahead of the remaining groups thanks to an earnings beat from Biogen Idec (BIIB 339.30, +35.62). The stock sports an advance ... More
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