Stock Futures Plunge Amid Very Weak Jobs Report
NEW YORK (TheStreet) -- U.S. stock futures plunged Friday after the economy added far fewer jobs than expected.
Demand for safe-haven assets rose amid heightened risk aversion, pushing the yield on the 10-year Treasury note below 1.5%. Gold was rising amid renewed expectations for additional quantitative easing.
Futures for the Dow Jones Industrial Average were down by 172 points at 12,211. Futures for the S&P 500 were lower by 25 points at 1285. Futures for the Nasdaq were dropping 45 points to 2,478.
The Labor Department said 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 expectations of 164,000. The 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. Global markets had already been trading weaker amid fresh signs of a slowdown in China and further weakness in Europe. 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. was losing 0.9%, while Germany's DAX was plunging 2.8%. 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 Bureau of Economic Analysis also released numbers on personal income and spending. Personal income increased $31.7 billion, or 0.2% in April, down from 0.4% in March. Personal consumption expenditures rose 0.3%, up from 0.2% in March. At 10 a.m., the Institute for Supply Management will release the manufacturing index for May. Consensus expects manufacturing activity to have dipped to 54 from 54.8 in April. Also at 10 a.m., the Commerce Department will release construction spending data for April. The morning also will feature reports on auto and truck sales. Bad news on the jobs front is likely to raise concerns about the resilience of the U.S. economy to overseas pressures and could revive expectations that the Federal Reserve will step in with more quantitative easing. Commodities markets were lower Friday. July oil futures were down by $3.67 at $82.86 a barrel, and August gold futures were reversing earlier declines, rising $9.8 to $1,574 an ounce. The benchmark 10-year Treasury was higher by 32/32, lowering the yield to 1.456% and the greenback rising 0.3%, according to the dollar index. In corporate news, 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. 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
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