Dow sinks more than 200 points on dismal jobs data
The economy added only 69,000 jobs in May, well below expectations for 150,000. Bonds and gold rally as oil sinks. World markets slump on weakness in China and Europe.
By Shanthi Bharatwaj
U.S. stocks plunged in early trading Friday after the government said the economy added far fewer jobs than expected, adding to concerns about a global slowdown.
In the broader markets, losers were outpacing winners by 8-to-1 on the New York Stock Exchange and by about 7-to-1 on the Nasdaq.
The Labor Department said early Friday the economy added 69,000 jobs in May, well below the 150,000-plus jobs economists were expecting.
The private sector added 82,000 jobs, compared to market's expectation of 164,000.
Unemployment rate ticked up to 8.2%. Economists were expecting the rate to remain steady at 8.1%.
The report also included downward revisions to March and April numbers. The economy created only 143,000 jobs in March, compared to 154,000 estimated earlier.
In April, nonfarm payrolls rose by only 77,000, a significant reduction from the 115,000 originally estimated.
The pace of job creation has decelerated sharply since the first quarter, when the average monthly gain was 226,000.
Demand for haven assets rose amid heightened risk aversion, pushing the yield on the 10-year Treasury note below 1.5% for the first time ever. Gold was rising sharply amid renewed expectations for additional quantitative easing in the wake of the disappointing data.
"If we’re going to hover around 150,000 jobs a month, I think there’s going to be a lot of vacillation, a lot of talk, but I think if we’re at 150,000 and the momentum feels like it’s slowing, I think we’re going to go to a QE3," he added.
China posted its slowest manufacturing growth in more than a year, with the purchasing managers index falling to 50.4 in May from 53.3 in April.
Japan's Nikkei shed 1.2%, while Hong Kong's Hang Seng Index declined 0.4%.
European shares dropped amid reports of a further slowdown in manufacturing and rising unemployment in the 17-nation eurozone.
The eurozone PMI declined to 45.1 in May from 45.9 in April, marking a three-year low. Unemployment in the region hovered at 11%, with 17.1 million people now without jobs.
The FTSE in U.K. deepened losses, losing 1.1%, while Germany's DAX was plunging more than 3%.
In Germany, the yield on two-year bonds turned negative for the first time, indicating that investors were essentially paying for capital protection.
Meanwhile, the U.S. Bureau of Economic Analysis also released numbers on personal income and spending.
Personal income increased $31.7 billion, or 0.2 percent in April, down from 0.4% in March.
Personal consumption expenditure rose 0.3%, up from 0.2% in March.
The Institute for Supply Management's index of manufacturing activity dipped to 53.5 in May from 54.8 in April, below expectations for a reading of 54.
The Commerce Department said construction spending data rose 0.3% in April, compared toa forecast for a 0.4% rise.
The afternoon will feature reports on auto and truck sales.
“It’s hard to look around and see a lot of rays of sunshine. I think it’s important to recognize, though, that every time in this recovery when things have looked gloomy, the economy has turned out to be resilient – not strong, but it keeps going,” said Josh Feinman, global chief economist at Deutsche Bank Advisors.
“I think it would take something of [drastic] nature to undermine the recovery, but at the same time that recovery – I would characterize the recovery as fluctuations around a mediocre trend. That’s kind of what it is; we’re bouncing around a growth trend that is, for a lack of a better word, just pretty darn mediocre,” said Feinman.
Commodities markets were lower Friday. July oil futures were down by $3.01 at $83.52 a barrel.
August gold futures were rising $48.3 to $1,612 an ounce, reversing earlier declines.
Meanwhile, the benchmark 10-year Treasury was higher by 28/32, lowering the yield to 1.47%. The greenback was last trading flat against a basket of currencies, according to the dollar index.
In corporate news, BP (BP) said Friday it has received "unsolicited indications of interest" for its 50% stake in TNK-BP, Russia's third-largest oil producer.
BP's stake in TNK-BP could be worth more than $30 billion, according to The Wall Street Journal.
Shares were up 1.3%.
General Motors (GM) said vehicle sales rose 11% in May to 245,256 vehicles over the same month a year ago, its highest monthly total since August 2009. Shares were still falling nearly 3%.
Ford (F) said sales of vehicles rose 13% in May, led by rapid growth in pick-up truck sales.The stock was down 3.4%.
Shares of Groupon (GRPN) were down more than 9%. The company's post-IPO lock-up has expired, freeing up more shares for trading.
Wal-Mart (WMT) holds its annual shareholder meeting Friday amid calls for Wal-Mart's CEO and chairman to be removed from the board after a bribery investigation in Mexico. Shares were lower by 0.2%.
The Republican Party: Subsidiary of Koch Industries.
One last one for the road. LMAO
Wall Street always finds something to either cry or cheer for as an excuse for the market to do
what they want it to do.
I can't understand how the average person can afford to buy $30,0000-$40,000 automobiles.
How do they do it?
We so need a new leader. President Obama has given tax incentatives to companies like Goldman Sachs (by the way this corporation owns the White House) for sending jobs overseas. I know because I along with 10 other colleagues lost my job due to a program called Patra. This program sends our mail, policy checking, etc. overseas to India.
On top of all this corporate America has the nerve to overpay CEO's millions and millionsof dollars while mid-cass Americans are losing their homes and can't afford to put food on the table. Where does this all end?
"Unemployment rate ticked up to 8.2%"
The truth is that the unemployment rate is closer to 18.2% when you take into consideration all the million of people who are no longer elgible to collect benefits and are no longer counted. Plus the gov recently announced they are reducing and or eliminating benefit extensions which will only drive the real unemployment number higher but of course that's not what will be reported. The report will show unemployment rate dropping which is nothing more than lies..
He impressed me.
He took a huge deficit and balanced the budget in what 2 years?
Mostly by taking on the Union thugs.
Asking those poor , poor union workers, to pay 12% into medical and retirement, when the rest of the state, in private enterprises, are paying well over 22%.
Anyone remember the rioting in WI- Kinda looked just like Greece!
What happened to fairness, you ask?
See, "fairness' ONLY applies when it hits the lefty agenda !
The other way around - no one cares about "fairness anymore.
If you want to be REALLY "fair" let the gov workers pay the average of what the private sectors pays. If it's 22% then that's the number. How's THAT for "fairness" ?
Looks like Walker is going to win BIG in this second , phony, union rigged "recall"
It tells you how out of touch these lefties are. They brought in all kinds of Union thugs to demonstrate , millions of dollars to advertise /smear Walker and he is STILL going to wipe the floor with them in this fake "recall"
Bye , bye Obuma - it's going to be ugly
"I AGREE KITE....But we have to creep before we crawl,walk and run...
And if anyone presents this type of legislation or agenda, MOST jump back horrorfied, yelling it can't be done, BECAUSE we have never done it before !! "
I agree with this, but I'm afraid it may be too late for baby steps.
Yes we have suggestions here......As we do on other blogs and across America in bar rooms, and family dinner discussions........BUT the PROBLEM is none of them are being IMPLEMENTED.
I AGREE KITE....But we have to creep before we crawl,walk and run...
And if anyone presents this type of legislation or agenda, MOST jump back horrorfied, yelling it can't be done, BECAUSE we have never done it before !!
Baby steps, baby steps.....Who's going to be first; While Rome is burning.?
Quite amusing how they TRY to ease the failures we see!
Here is a quote from this site an hr ago, that they rewrote...U.S. jobs growth probably snapped back in May from weather-related distortions that had slowed hiring, suggesting the economy was still expanding moderately despite strong headwinds from Europe.
So they thought that 69,000 was EXPANSION! Maybe in Cuba, but America has over 300,000,000 citizens, 69,000 is a Billy Ray Cyrus concert!
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[BRIEFING.COM] Stocks entered the weekend on a mixed note as the S&P 500 shed 0.1% while the Dow ended with a gain of 0.1%.
The major averages began the day on a lower note as nine of ten sectors saw losses of more than 0.5%.
The consumer staples sector was the lone exception as the group spent the entire day in positive territory thanks to the relative strength of Dow component Procter & Gamble (PG 81.89, +3.19). The second-largest staple stock advanced ... More
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