This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Stocks Slide as U.S. Economy Stagnates

Stocks in this article: ^DJI ^GSPC ^IXIC STX NFLX XRTX LF

NEW YORK ( TheStreet) -- U.S. stocks fell Friday after a government report showed the U.S. economy produced fewer than 100,000 jobs for the third month in a row. Still, the economy may not be weak enough to warrant another round of support from the central bank.

The Dow Jones Industrial Average declined 124.20 points, or 0.96%, to 12,772, and closed down 0.84% for the week. The S&P 500 slipped 12.90 points, or 0.94%, to 1,355, erasing its gains to close down 0.55% for the week.

The Nasdaq slid 38.79 points, or 1.3%, to 2,937, and was flat for the week.

The weakness in stocks was led by the technology, capital goods, basic materials and energy sectors, with all 10 S&P 500 large-cap sectors falling.

On the Dow, 25 of 30 blue-chip components lost ground, driven by Alcoa (AA), Caterpillar (CAT), Hewlett-Packard (HPQ) and IBM (IBM). McDonald's (MCD) was up a bit more than a quarter of a percent and AT&T (T) was trading sideways.

Losers outpaced winners by 2.1-to-1 on the New York Stock Exchange and 2.5-to-1 on the Nasdaq. Volume was light, with about 2.64 billion shares changing hands on the NYSE and 1.41 billion on the Nasdaq.

The Labor Department reported that U.S. employers added 80,000 new workers to their payrolls in June, below the consensus estimate of 90,000 jobs, according to a poll of economists by Reuters. It was the third straight month of sub-100,000 jobs growth, and the worst quarter for job growth in about two years.

The whisper number among traders was closer to 125,000. The unemployment rate remained unchanged at 8.2%. Nonfarm payroll employment for April was downwardly revised to 68,000 from 77,000 and the figure was upwardly revised in May to 77,000 from 69,000.

"They've called it the spring slowdown, but really what happened at the beginning of the year was more a case of weather, maybe some leftover stimulus from the jobs act and that's really not the beginning of a new V-shaped recovery," said Doug Roberts, chief investment strategist at "In other words, as I like to say, the government is still a lender and spender of last resort; when they administer stimulus it works, and as it fades out it ... people go back to the way it was before."

"It kind of locks the market in a trading range for the foreseeable future until investors see a central bank and Federal Reserve quantitative easing program kind of coming out there," said Roberts.

Meantime, Andrew Wilkinson, chief economic strategist at Miller Tabak, said that "the June report does little to shift our view that the economy is unfortunately horizontally challenged in the face of a slowdown in activity engineered by insufficient political vigor in the eurozone."

"At the current pace of hiring, the Federal Reserve likely has a low degree of confidence in its ability to mastermind the scale of reductions in the headline rate of unemployment that are incorporated in its Summary of Economic Projections."

While unimpressive, analysts believe that Friday's jobs number is probably not enough to help trigger more Fed policy action at its August meeting. However, if job growth continues to slow, action could be taken at the September meeting, according to Bank of America and BTIG reports.

August crude oil futures settled down $2.77 to $84.45 a barrel. August gold futures shed $30.50 to settle at $1,578.90 an ounce.

The benchmark 10-year Treasury was up 14/32, diluting the yield to 1.556%, while the dollar was rising 0.56%, according to the dollar index.

In corporate news, Seagate Technology (STX) said it expects report fourth-quarter revenue of $4.5 billion, down from its previous estimate of about $5 billion.

Shares slid 0.40%.

Netflix (NFLX) shares got a lift from a Facebook blog post by CEO Reed Hastings that said the company's monthly viewing exceeded 1 billion hours for the first time ever in June. Shares popped more than 3.5%, but receded to close up just 0.21% in Friday's session.

Shares of LeapFrog Enterprises (LF) finished down more than 1.9% as the education toymaker's chief financial officer Mark Etnyre resigned citing a desire for more family time.

Xyratex (XRTX) shares were jumped more than 13% after the storage-systems provider swung to fiscal second-quarter profit amid margin improvements. Shares finished Friday up 5.97%.

Earnings season begins next week, beginning with Alcoa's (AA) report on Monday.

Ahead of this, Brad Sorensen, market and sector research director at Charles Schwab, said that it will be an opportunity for companies to really come out and talk about what they're seeing in the economy.

"We have to be a little bit cautious here that there is a couple unknowns about how much the U.S. slowdown has really affected operations in the second quarter of 2012 , and then to an extent the European ongoing debt crisis," said Sorensen.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,625.95 +269.08 1.55%
S&P 500 2,043.88 +30.99 1.54%
NASDAQ 4,718.6120 +74.30 1.60%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs