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NEW YORK (
TheStreet) -- It's going to take more than a weekend for Wall Street to shake off the impact of May's poor jobs report.
The major U.S. equity indices were
demolished on Friday after the Bureau of Labor Statistics said nonfarm payrolls rose by 69,000, less than half of expectations.
Coming against the backdrop of Europe's financial woes, stocks sold off indiscriminately with the
Dow Jones Industrial Average going negative for the year, and the
S&P 500 breaking below 1280 for the first time since mid-January. As of Friday's close at 1278, the index is now 10.1% below its intraday 2012 high of 1422 on April 2, dipping a toe into correction territory.
Fear ruled the day as the yield on the 10-year Treasury bond slipped below 1.5% for the first time ever and gold vaulted back above $1600 an ounce.
Doug Cote, chief market strategist at ING Investment Management, expects the jobs report to be a cloud over the market until weekly initial jobless claims come out on Thursday.
"If that [initial claims] all of a sudden looks good, then we'll get over it," he said. "The payroll report was a catalyst to bring this market down because there's a lot of fear out there, but the underlying uncertainty lies with Europe."
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That's not to discount how poor the employment data were on Friday. It wasn't just May either. Both April and March saw downward revisions in payroll additions to 77,000 from 115,000 and to 143,000 from 154,000, respectively.
Cote noted there was a "preponderance of weak U.S. economic data" this week including the ADP jobs report, personal income, second-quarter GDP and consumer confidence and noted that "on top of what's going on in Europe, taken together, [the jobs data Friday] came in at a bad time."
When the closing bell sounded, 2012's stellar start was history. The Dow is now down 0.8% year-to-date. The S&P 500 is holding with a 1.6% gain, while the
Nasdaq Composite still has some cushion, up 5.5% on the year.
One possible silver lining from the poor jobs report is that it could prompt the
Federal Reserve to embark on another round of quantitative easing.