Stocks Plunge on Weak Jobs Report
NEW YORK (TheStreet) -- U.S. stocks were punished Friday after the government said the economy added far fewer jobs than expected, adding to concerns about a global slowdown.
The Dow Jones Industrial Average lost 275 points, or 2.2%, to close at 12,118, not far above a session low of 12,107. The blue-chip index, which is now negative for the year, endured its biggest one-day point drop of 2012.
The S&P 500 dropped 32 points, or 2.5%, to finish at 1278, breaking below 1280 for the first time since Jan. 13. The index has now slipped into correction territory, declining 10% from an intraday high of 1422 on April 2.
The Nasdaq shed 80 points, or 2.8%, to settle at 2747. The index has now dropped 12.3% since hitting its high for the year of 3134 on March 27.Friday's selloff follows a dismal May when all three major U.S. equity indices lost more than 6% amid increasing uncertainty about the stability of the eurozone as first Greece and more recently Spain have come under financial stress. Year-to-date, the Dow is now down 0.8%, while the S&P 500 is up 1.6%, and the Nasdaq is holding a 5.5% gain. All 30 Dow components were in the red. The biggest percentage decliners within the blue chips were American Express (AXP), Bank of America (BAC) and Hewlett-Packard (HPQ), all of which were losing more than 4%. Shares of HP, which announced a major restructuring last week when it reported its fiscal second-quarter results, fell more than 6% after Jefferies downgraded the stock to hold and lowered its price target to $23 from $30. The firm said it expects most of HP's businesses to be challenged in the medium term. "Specifically we think tablets will hurt PCs (and Windows 8 will not help), smartphones will hurt printers, and European uncertainty will hurt enterprise IT spending," Jefferies said. In the broader markets, losers outpaced winners by a 6-to-1 ratio on the New York Stock Exchange and by a more than 5-to-1 ratio 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 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. The pace of job creation has decelerated sharply since the first quarter, when the average monthly gain was 226,000.
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