Updated from 9:44 a.m. EDT
Stocks in New York were sagging Friday as the government's read on unemployment jumped for August, renewing investor concerns about a U.S. recession.
Dow Jones Industrial Average
tumbled 109 points to 11,107, and the
gave back 11 points to 1226. The
was down 21 points at 2238.
Before trading got under way, the Labor Department reported that the August unemployment rate reached 6.1%, its highest level since September 2003. Economists had expected the rate to hold at July's level of 5.7%. Nonfarm payrolls were down by 84,000, a bigger loss than 75,000 in July. The average workweek remained unchanged at 33.6 hours, and the average hourly wage rose 0.4% from a month ago to $18.14.
"Terrible," said Jack Ablin, chief investment officer at Harris Private Bank, of the jobs number. "I would say that it really kind of knocks the legs out of any thought of recovery here." He said the unemployment number further complicates an already difficult situation brought about by the housing crisis and credit crunch.
Ablin said that the the economic stimulus package has helped the U.S. avoid the definition of a recession. "But ask most people
and I think they would agree that we are experiencing recession even if the numbers don't show it," he said. "And
the jobs number would confirm my suspicion."
Some of the weak data was already priced in to stocks, which is why the market didn't fall as much as it could have following the unemployment release, said Ablin.
In company news, bond fund manager
, part of
, named Mohamed El-Erian as chief executive. El-Erian replaces Bill Thompson, who retires at the end of the year.
Meanwhile, hedge fund
refuted rumors it is closing down. Earlier this week, fellow fund
shuttered its business after making bad bets on commodities.
appeared to be headed for a rough day after Goldman Sachs slapped a "conviction sell" sticker on the stock, saying it foresees more asset writedowns in Merrill's future.
said it would sell its warranty-management business to insurance company
for $140 million.
is in negotiations to purchase chew-tobacco producer
, according to a report on
Contributing to bearishness in the sector, mobile-phone maker
was also hurting after saying its market share would probably decline in the third quarter.
Wall Street Journal
report said that PC maker
is trying to sell its computer factories in a bid to remain competitive.
In one bright spot,
jumped 26% after Samsung said it may be interested in buying the company.
As for earnings, video-game maker
said Thursday after the close that it swung to a profit from a year ago and raised guidance. And ahead of the opening bell, chipmaker
reported a profit that rose year over year but its sales outlook disappointed, sending shares lower.
In commodities, the price of crude oil was down $1.83 at $106.06. Gold was adding $8 to $811.20.
Longer-dated U.S. Treasury securities were higher. The 10-year was up 13/32 to yield 3.57%, and the 30-year was up 21/32, yielding 4.22%. The dollar was gaining on the euro and pound, but softening vs. the yen.
"I'm not worried about inflation, although the average hourly earnings did tick a little higher than expectations," said Ablin. He pointed out that commodities have recently underperformed stocks, and said, "I think we're shifting more toward a disinflationary, deflationary outlook." Such an environment would leave the
room to lower interest rates, said Ablin.
Major foreign exchanges, including the FTSE in London, the Dax in Frankfurt, the Nikkei in Japan and the Hang Seng in Hong Kong, were lower.