Dow falls 124 as jobs report disappoints

Stocks end lower for the week. The economy adds 80,000 jobs in June, less than expected. The unemployment rate holds at 8.2%. IBM, Caterpillar and Boeing are among the day's losers. Apple weighs on the Nasdaq. Oil falls below $85.

By Charley Blaine Jul 6, 2012 11:13AM
Charley BlaineUpdated: 7:12 p.m. ET

Stocks tumbled today after the government reported the economy added fewer jobs than expected in June. The national unemployment rate was unchanged at 8.2%.

The losses were bad, but they were worse early in the session. The  Dow Jones industrials ($INDU) were down as many as 194 points before bargain-hunting cut the loss by more than a third. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) were off around 1%.

Nonfarm payrolls grew by 80,000 jobs, up slightly from the 77,000 created in April. Private payrolls grew by 84,000. That was a huge disappointment. The ADP National Employment Report on Thursday had projected a gain of 176,000 private-sector jobs.

The report helped push European stocks lower. Gold (-GC) and crude oil (-CL) also dropped back.

The Dow closed down 124 points to 12,772. The S&P 500 fell 13 points to 1,355, and the Nasdaq was off 39 points to 2,937. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, dropped 35 points to 2,612.

Article continues below.
Apple (AAPL), the biggest influence on the Nasdaq-100, was down $4.06 to $605.88 after falling to as low as $601.66. The decline subtracted 3.4 points from the index. Microsoft (MSFT), down 52 cents to $30.19, subtracted 3.9 points from the index. (Microsoft is the publisher of MSN Money.)

The declines in European markets was extensive. Stocks in France and Germany fell nearly 2%. But the biggest declines -- and worries -- were in Spain where the benchmark IBEX 35 Index ($ES:IB) fell 215 points to 6,739. The 10-year Spanish bond yield reached 7.036% before ending at 6.954%.

About 60% of the Dow's loss was concentrated in six stocks: IBM (IBM), Caterpillar (CAT), United Technologies (UTX), Chevron (CVX), Boeing (BA) and Hewlett-Packard (HPQ).  Losses by Chevron and Exxon Mobil (XOM) were tied to lower oil prices. The others were in  large part due to the continuing worries about Europe as well as concern about a slowing domestic economy.

Caterpillar was hurt specifically after Wells Fargo analyst Andrew Casey took the stock off the company's "Priority Stock List." Casey blamed macroeconomic concerns, a strengthening dollar as well as "lackluster channel checks."

Caterpillar was off $2.18 to $84.61, subtracting nearly 17 points from the Dow. The stock is down 7.3% for the year after falling more than 20% in the second quarter.

The Dow and the S&P 500 ended the first week of July modestly lower. The Dow was off 0.8%. The S&P 500 fell 0.6%. But the Nasdaq basically ended flat. All are higher for the year.

Markets for the week



7/6/2012

6/29/2012

% chg.

YTD chg.
Dow Industrials

12,772.47

12,880.09

-0.84%

4.54%
S&P 500

1,354.68

1,362.16

-0.55%

7.72%
Nasdaq 

2,937.33

2,935.05

0.08%

12.75%
Russell 2000

806.93

798.49

1.06%

8.91%
Crude oil 

$84.45

$84.96

-0.60%

-14.55%
(per barrel)

0.00

0.00

0.00%

0.00%
U.S. Dollar Index 

83.56

81.75

2.21%

3.77%
10-yr. Treasury

1.54%

1.66%

-6.93%

-17.48%
Gold

$1,578.90

1,604.20

-1.58%

0.77%

A closer look at the jobs report . . . and the Fed
The jobs report prompted immediate speculation that the Federal Reserve would engage in a new round of quantitative easing -- buying Treasury securities to support the economy. But one reason for today's slump was that the jobs report was not such a disaster that the Fed would feel compelled to act.

The Fed's rate-making body, the Federal Open Market Committee, doesn't meet until a two-day meeting that starts July 31. If the Fed is deeply concerned, The Wall Street Journal's Jon Hilsenrath noted today (Registration may be required), you might get a hint when Fed Chairman Ben Bernanke testifies before Congress on July 17 and 18.

If you don't see anything by either the annual mid-summer testimony or the July 31-Aug. 1 meeting, look toward the annual gathering in Jackson Hole, Wyo., at the end of August. There you will see the structure of a move start to be defined.

The jobs report was, in fact, disappointing for the thousands of people looking for jobs, for President Obama in the midst of a re-election campaign and others hoping that the U.S. economy will support the global report.

"At the June rate of job growth it would take us five years to get back to pre-recession employment levels," noted Philippa Dunne and Doug Henwood of the Liscio Report.

Here's the quick-and-dirty about the jobs report.
  • The payroll and private-sector gains were disappointing. There had been hopes both numbers would top 100,000. Nonfarm payrolls grew an average 226,000 a month in the first quarter and 75,000 in the second.
  • Manufacturing added 11,000 jobs and averaged 10,000 jobs a month in the second quarter, down from 41,000 in the first quarter.
  • Residential construction employment -- worth watching because of the talk of a nascent housing recovery -- was down 1,000 jobs to 570,900. In fact, residential construction lost 461,000 jobs between its peak in 2006 and bottom in November 2011 -- and has gained back barely 10,000 of those jobs since.
  • The revisions for April and May provided no help. In fact, the net was a decline of 1,000 jobs.
  • The so-called real unemployment rate -- which includes those who have given up looking for jobs, or can only find part-time work -- was up slightly to 14.9%.
  • There were small bits of good news. The average work week was up 0.3%. Average hourly wages were up 6 cents to $23.50 an hour. The average is up 2% over the last year.
  • This is the third year in a row where job growth in the first quarter or so was stronger than in the next few months. However, if you look at jobs data over the long run, that pattern appears regularly. Between 1987 and 2011, nonfarm job gains averaged 117,000 a month from January through May. From June through September, the number drops to 87,000 a month and jumps to 112,000 in the last three months of the year. Floyd Norris of The New York Times noticed this phenomenon as well today and suggested seasonal adjustments may be distorting the reality that is not as bad as the numbers suggest.
  • Nonfarm payrolls have risen for 28 straight months, with job gains totaling 3.8 million; private-sector employment has risen for 29 straight months, with 4.4 million job gains in that time.
The causes for the current slowdown can be argued for hours -- including the seasonal factors. Two reasons that cannot be ignored are the mild winter that caused some jobs to be filled early in the year that might not have been filled until  spring. Second, gas prices rose steadily through the first quarter and probably caused many consumers to defer or cut spending. That would cause employers to hold back on hiring as well.

The European debt crisis is affecting businesses as well. So are the tensions over this fall's elections.

"The job market is soft," David Resler, chief economic adviser at Nomura Securities International, told Bloomberg News. Resler had correctly forecast the payrolls gain. "I’d characterize our reaction as much the same way the Fed will react -- not surprised but disappointed. It’s just not the kind of growth we need to see at this stage in the business cycle."

Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$84.45

$87.22

-0.60%

-14.55%
(per barrel)











Heating oil (-HO)

$2.7099

$2.7684

0.00%

-7.01%
(per gallon)











Natural gas (-NG)

$2.7760

$2.9450

-1.70%

-7.13%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7160

$2.7648

3.20%

2.21%
(per gallon)











Brent crude 

$98.19

$100.70

0.40%

-8.56%
(per barrel)











Retail gasoline

$3.3580

$3.3380

0.15%

2.50%
(per gallon; AAA)












Commodities move lower

Crude oil in New York settled down $2.77 to $84.45 a barrel. Brent crude was down $2.88 to $97.82 a barrel. Crude was off 0.6% for the week and is down 14.6% for the year.

The national average price of gasoline was up for the second day in a row to $3.358 a gallon, according to AAA's Daily Fuel Gauge Report. That's the first two-day increase since April 4-5. Given crude oil's decline, however, the streak may not last much longer.

Gold was off $30.30 to $1,579.10 an ounce. Silver (-SI) fell 75.2 cents to $26.92 an ounce. Copper (-HG) fell 8.35 cents to $3.4095 a pound. For the week, gold was down 1.6%, with silver and copper off 2.5%.

Interest rates were lower, with the 10-year Treasury yield falling to 1.544% from 1.597% on Thursday. The dollar was higher against major currencies.

A lot of red in the stock market
Only five of the 30 Dow stocks were higher: McDonald's (MCD), Wal-Mart Stores (WMT),  AT&T (T), Home Depot (HD) and Verizon Communications (VZ).

Technology, industrial and energy were the weakest S&P 500 sectors, with all 10 sectors in the red. Consumer staples and utility stocks were the best relative performers.

Only 82 S&P 500 stocks were showing gains, led by printing giant R.R. Donnelly (RRD), WPX Energy (WPX) Chesapeake Energy (CHK) and Family Dollar (FDO).

Meanwhile, just eight Nasdaq-100 stocks finished on the upside, led by BlackBerry maker Research In Motion (RIMM), Green Mountain Coffee Roasters (GMCR), Apollo Group (APOL), the operator of the University of Phoenix for-profit colleges, and Dollar Tree (DLTR).

Among the losers (besides Apple) was Amazon.com (AMZN), down $2.01 to $225.05, as investors seemed to be skeptical of reports from Bloomberg and others that the company is working on a new smartphone product.

Yahoo (YHOO) shares were off 7 cents to $15.78, despite a report in The Wall Street Journal that the company is considering Jason Kilar, CEO of video site Hulu, for its permanent CEO position. Hulu later reported that Kilar had withdrawn.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.070%

-12.50%

600.00%
5-year Treasury note 

0.640%

0.673%

-12.21%

-22.89%
10-year Treasury note

1.544%

1.597%

-6.93%

-17.48%
30-year Treasury bond

2.664%

2.722%

-3.58%

-7.79%
Currencies











U.S. Dollar Index

83.561

82.942

2.21%

3.77%
British pound

1.5494

1.5528

-1.33%

-0.28%
(in U.S. $)

 








U.S. $ in pounds

£0.645

£0.644

1.35%

0.28%
Euro in dollars

$1.23

$1.24

-2.67%

-5.17%
(in U.S. $)

 








U.S. $ in euros

€ 0.814

€ 0.807

2.74%

5.45%
U.S. $ in yen 

79.74

79.91

0.00%

3.43%
U.S. $ in Chinese

6.39

6.35

0.22%

0.96%
yuan











Canada dollar

$0.982

$0.986

-0.02%

0.12%
(in U.S. $)

 








U.S. dollar 

$1.019

$1.014

0.03%

-0.12%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,578.90

$1,609.40

-1.58%

0.77%
(per troy ounce)

 








Copper (-HG)

$3.410

$3.493

-2.49%

-0.77%
(per pound)

 








Silver (-SI)

$26.9200

$27.6720

-2.51%

-3.56%
(per troy ounce)

 








Wheat (-ZW)

$8.0625

$8.3800

6.47%

23.52%
(per bushel)

 








Corn (-ZC)

$6.9300

$7.085

9.18%

7.19%
(per bushel)

 








Cotton 

$0.7062

0.7058

-1.00%

-22.97%
(per pound)

 








Coffee

$1.7645

1.8035

3.37%

-23.17%
(per pound)

 








Crude oil (-CL)

$84.45

$87.22

-0.60%

-14.55%
(per barrel)










 

302Comments
Jul 6, 2012 11:44AM
avatar
So the government can't manage a post office
can't manage our schools
can't manage social security
can't end a war
can't create decent jobs
Sumpreme Court OK's the largest tax hike in history.

Why does anyone have any trust in the Federal level of the US Government?
Jul 6, 2012 11:44AM
avatar
Our nation has 9 million more people now than it did 4 years ago, but we have 2 million less people employed.   


But we still need to issue more work visas and let the illegals come over and stay without being deported. Insane. 
Jul 6, 2012 11:23AM
avatar
Who writes the headlines? Tepid jobs report??? The job market is falling apart and the writer calls these numbers "tepid"????? Goodness....but perhaps he doesn't want to stir up a riot...
Jul 6, 2012 11:25AM
Jul 6, 2012 11:25AM
avatar
Obamanomics....  November cannot get here fast enough...
Jul 6, 2012 12:03PM
avatar
Will illegals have to buy health insurance? 
Jul 6, 2012 11:38AM
avatar
Just remember this and keep repeating and everything will be all right......"the private sector is doing fine......." the private sector is doing fine".................The Democrats controlled the House and the Senate the last two years of the Bush administration and the first two years of this slow-motion train wreck , so don't blame it on  a Republican congress now. President Obama said that he could and would fix the economy. Just wait until the $ 2 trillion tax.......er, I mean penalty increase hits the consumers and the small business employers next as Obamacare continues to be phased in. Soon , everyone who didn't have a healthcare card will have one , whether they can afford it or not , but there probably won't be many hospitals open or doctors still in business.  Gasoline prices are "down" to $3.39 a gallon. Inflation is up , and runaway inflation is just around the corner, thanks to TARP, QE1 and Qe2. Can QE3 be too far off. How's that "Hope and Change " thing workin' out now ?
Jul 6, 2012 12:10PM
avatar

And so it goes.  Last week we had a run up on essentially no new information.  Now the institutions are booking their gains from last week.  Sure the jobs report was low but they've been low for months.  Do you know anyone that got a real job lately?  The sell off will be carefully calculated to be scary enough to lure the FED into another QE.  Of course since the FED ARE BANKERS, the bankers will find out about it first and be poised to ride yet another wave of newly created money over the 13000 mark.  They will then cash in taking the DOW back below 13000.  They will have pocketed more wealth and your savings will have been devalued at a level commensurate with the amount of money the FED just created. 

 

Shuffling papers does not fix things.  Transferring wealth from savers to institutions is the Fed's way of getting you out there spending whether you want to or not!   The only problem is that the transfer of wealth does nothing to address the underlying weakness in the economy.  It just keeps the financial sector making money.  The financial sector are middlemen...they create nothing.  They only take their cut.  Now the economy is so bad there is no cut to take.  No problem, they just print their own cut!  

Jul 6, 2012 12:18PM
avatar
"if unemployment is over 8 percent 4 years from now, I will be a one term President." 

Nostradumazz said this in an interview on ABC news. I hope he is a better prophet than he is a President. 


Jul 6, 2012 12:02PM
avatar
Real underpaid and unemployment rate is over 20%....easily.  It has not changed.  It will not.  One need only to track the massive layoffs we hear about week to week. I would venture a guess ... there was not a net gain in FT employed,  We are headed further in the other direction, now.  There was no recovery.  We are in a 'depression' and this will get much worse.  Those more 'educated' here in economics know that.  Have a nice weekend, all.
Jul 6, 2012 11:40AM
avatar
Our nation has 9 million more people now than it did 4 years ago, but we have 2 million less people employed.  THIS should be the focus as to why the Obama regime has been so terrible!  Everytone knows the published 8.2% unemployment rate is crap.  The REAL unemployment rate has been as high as it is today since the Great Depression. 
Jul 6, 2012 11:45AM
avatar

"The ADP National Employment Report on Thursday had projected a gain of 176,000 private-sector jobs."

 

Why does anyone pay attention to this ADP report?  They are never even close to the numbers that are issued on Friday.  This week they are over twice as high.

Jul 6, 2012 12:04PM
avatar
bye bye Obummer. It was not nice knowing you. Hopefully there are some nice, cushy, community organizer jobs open in Chicago for you in January.
Jul 6, 2012 12:28PM
avatar
do we really want 4 more years of this??  time to send bo on his way!!
Jul 6, 2012 12:25PM
avatar
How can you create 80k jobs in June and have 380k file for unemployment. Is that not a loss of 300k jobs? 
avatar
Why would 300 million + ever spend 30-40% of every dime they earn on a government that can not come to terms with its' only job being : MAKING LIFE BETTER FOR THOSE PAYING FOR THAT SERVICE?

Because some butt hungry liberal tells them its is the "HUMAN" thing to do .............. when less than 5% of all humans do that thing? ....................... NOT!
Jul 6, 2012 12:09PM
avatar
Here we go - time to put the finishing touches on buying the election...... Grab your ankles and hold on, here they come again. Time to invest in guns and condoms -  for those without a clue, the condoms can also be used to keep the rain out of the gun barrels and the guns are to take care of the ones without a clue.
Jul 6, 2012 11:57AM
avatar
The actual rate is 14.9%. People who want to work, but have no job.
8.2 is the % of people collecting unemployment insurance,
So no, about 85% of people who want to work, have some work.
Jul 6, 2012 12:12PM
avatar
Seriously.....and this is a surprise??? I have been posting, that there are NO jobs!!! Thankful that I have my own business!! Thanks Obuma for nothing!
Jul 6, 2012 12:42PM
avatar
Obama has no business experience and he has demonstrated over the last 4 years that he polarizes the parties and can not get both parties to work together. Four more years of Obama and our country will be a complete mess.
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