Dow Finishes Below 10,000 on Disappointing Jobs Report - TheStreet

Dow Finishes Below 10,000 on Disappointing Jobs Report

The major U.S. indices deteriorated in the final hour of trading Friday, ending more than 3% lower after a rough session.
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NEW YORK (

TheStreet

) -- The major U.S. indices deteriorated in the final hour of trading Friday, ending more than 3% lower after a rough session spurred by weaker-than-expected

May job growth, which dampened recovery hopes.

Although the unemployment rate declined to a lower-than-expected 9.7%, temporary Census hiring accounted for the bulk of job growth in May, according to the Labor Department.

The

Dow Jones Industrial Average

closed below the 10,000 level, losing 323 points, or 3.2%, to close at 9,932. On the week, the Dow lost 2%. The

S&P 500

gave up 38 points, or 3.4%, to finished the session at 1065, which was 2.3% lower than a week ago. The

Nasdaq

shed 1.7% week-over-week, and fell 84 points, or 3.6% lower, to close at 2219.

"When you strip out temporary Census hiring and look at private sector growth, the jobs report was clearly a disappointment and an indication of the tenuous recovery that we're in the midst of," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

"The other side of this story is that as the need for Census workers begins to decline, this temporary support that we've been getting to the jobs number could reverse unless private sector hiring picks up significantly," he added.

Overseas on Friday, Hong Kong's Hang Seng dipped 0.03%, and Japan's Nikkei declined 0.1%. The FTSE in London lost 1.6%, and the DAX in Frankfurt shed 1.9%.

Naoto Kan was named

Japan's new prime minister. Kan served as finance minister under the former prime minister Yukio Hatoyama, who resigned over a broken campaign promise to move a U.S. marine base.

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The Economy

The Labor Department reported an increase of 431,000 nonfarm payrolls in May, missing economists' expectations for an increase of 500,000 jobs. The unemployment rate declined to a lower-than-expected 9.7%, besting economists' projections for a rate of 9.8%. The bulk of May's growth, however, was attributed to government hiring for the 2010 Census, totaling 411,000 temporary positions. The Labor Department also revised March and April data to amount to 22,000 fewer jobs than initially reported.

Both hours and earnings rose in May, according to Labor Department data. Average weekly hours increased as expected, by a tenth of a point to 34.2. Average hourly earnings, meanwhile, rose 0.3%, which was better than the 0.1% increase that economists had been expecting.

"The blowout jobs report for May disappoints because it is mostly froth with little substance," said PNC Chief Economist Stuart Hoffman who said the most promising aspects of the report were hours and earnings, which both increased in May.

Hoffman said job gains were weak across most industries, particularly construction, which was down 35,000 jobs in May.

"Homebuilders are cutting back now that the homebuyers' tax credit has expired," he said.

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Company News

Caterpillar

(CAT) - Get Report

,

American Express

(AXP) - Get Report

and

Boeing

(BA) - Get Report

were put the most pressure on the Dow, while components ending Friday's session with the mildest losses included

Verizon Communications

(VZ) - Get Report

,

Procter & Gamble

(PG) - Get Report

and

McDonald's

(MCD) - Get Report

.

BP

(BP) - Get Report

placed a cap on the damaged well that has been spewing oil into the Gulf of Mexico couldn't yet determine if it would successfully stop the flow of oil. The stock ended 5.4% lower, at $37.16.

Shares of

Bank of New York Mellon

(BK) - Get Report

lost 4.7% after the global financial services company announced plans to offer $700 million worth of common stock to help fund its purchase of

PNC Financial's

(PNC) - Get Report

investment services division.

Yahoo!

(YHOO)

named Raymie Stata as new chief technology officer, replacing Ari Balog who said he was leaving the company for personal reasons in April. Stata most recently served as Yahoo!'s chief architect. The stock finished 2.8% lower.

AIG

(AIG) - Get Report

Chief Executive Robert Benmosche wants time to review options outside of a public offering for its Asian life insurance unit, according to

Reuters

.

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Commodities and the Dollar

Crude oil for July delivery lost $3.10, or 4.2%, to settle at $71.51 a barrel.

Elsewhere in commodity markets, the August

gold contract gained $7.70, or 0.6%, to settle at $1,217.70 an ounce.

The dollar was trading higher against a basket of currencies, with the

dollar index up by 1.2%.

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Treasuries

The benchmark 10-year Treasury gained 1 12/32, weakening the yield to 3.208%.

The two-year note rose 6/32, diluting the yield to 0.730%. The 30-year bond increased 2 14/32, lowering the yield to 4.133%.

--Written by Melinda Peer in New York

.

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