Dow Finishes Down 253 on Poor Employment Report
US stocks slumped, wiping out the weekly gain in the S&P 500, as a poor employment report drew concern that the world’s largest economy may fall into a recession. The Dow was down 253 points to close at 11,240. The S&P 500 was down 30 points to close at 1,173. The NASDAQ was down 65 points to close at 2,480. In Europe, the FTSE was down 126 points to close at 5,529. The Dax was down 192 points to close at 5,538. In Asia, the Nikkei was down 110 points to close at 8,950. The Hang Seng was down 372 points to close at 20,212. In the commodities markets, gold was up nearly 3% to close at $1,876 an ounce, while oil was down nearly 3% to close at $86 a barrel.
Caterpillar and FedEx retreated more than 3.5%, pacing losses among companies most-tied to economic growth. Financial stocks in the S&P 500 slumped 4%, the most among any industry. BOA, Citigroup, JPMorgan and Goldman Sachs tumbled at least 4.5% as the Federal Housing Finance Agency sued the lenders over residential mortgage-backed securities. The drop in the markets caused investors to retreat back into the gold safe haven that has become more and more popular over the last few years.
The S&P 500 slid as much as 18% from a three-year high on April 29 amid concern the economy was weakening. The index fell 5.7% in August, for the biggest monthly drop since May 2010. Stocks trimmed losses at the end of last month as Federal Reserve Chairman Bernanke said in a speech in that the central bank has tools to stimulate growth without signaling he will use them.
Employment in the US stagnated in August and the jobless rate held at 9.1% as American employers became less confident in the strength of the recovery. Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed. The median forecast in a Bloomberg News survey called for a gain of 68,000. Hourly earnings and hours worked both declined. The August data included a 48,000 drop in information industry jobs, mostly reflecting striking Verizon workers.
The disappointing jobs report provides the bears with more fuel for the fire to say that, along with economic unrest in Europe, a global recession is more of a probability than a possibility. The poor job report may now cause the Federal Reserve to make a move to sure up the global economy, something that the stock market would not be in favor of.