A dismal jobs report caused stocks to plunge yesterday.
The Dow Jones industrial average dropped 253 points, or 2.2 percent, wiping out its gains for the week. All 30 stocks in the average fell.
No jobs were added in the US last month, the government said early yesterday. It was the worst employment report in 11 months and renewed fears that another recession could be on the way. The yield on the 10-year note briefly fell below 2 percent and gold jumped US$48 an ounce as cash flowed into investments seen as less risky than stocks.
"It's certainly ugly," said Jeff Kleintop, chief market strategist at LPL Financial.
European markets followed US stocks lower. They were already down on reports that talks between Greece and international lenders over that country's debt crisis were breaking down. Germany's DAX closed down 3.4 percent; France's CAC-40 lost 3.6 percent.
The lack of hiring in the US last month surprised investors. Economists were expecting 93,000 jobs to be added. Previously reported hiring figures for June and July were also revised lower. The average work week declined and hourly earnings fell. The unemployment rate held steady at 9.1 percent. The rate has been above 9 percent in all but two months since May 2009.
Kleintop said the jobs report didn't change his view that the economy was headed for a stretch of weak economic growth, not a recession. He said the figures were likely skewed by unusual events that may have made employers reluctant to add jobs in August.
The Labor Department's report relies on data collected from surveys of households and businesses in the second week of August. That's right after Standard & Poor's removed the country's AAA credit rating and fears mounted that Europe's banking crisis could spread to the US Television screens were filled with images of riots in London.
"I'm not surprised that businesses weren't doing too much hiring in that environment," Kleintop said.
The Dow Jones industrial average lost 253.31 points to close at 11,240.26. It was the biggest fall in two weeks. The Standard & Poor's 500 index fell 30.45, or 2.5 percent, to 1,173.97.
The Dow fell 0.4 percent for the week, the S&P 0.2 percent. Both indexes have fallen five of the past six weeks.
The Nasdaq composite fell 65.71, or 2.6 percent, to 2,480.33. The technology-heavy index eked out a gain of 0.48 point for the week.
Cash poured into Treasurys and gold, assets believed to be safer bets during a weak economy. The yield on the 10-year Treasury note fell to 2.00 percent, and briefly traded below that level. It was 2.14 percent shortly before the report came out. Yields fall when demand for bonds increases.
The price of gold rose 2.8 percent to US$1,880. Fears that a stalling economy could reduce demand for oil and gasoline pushed benchmark crude oil down US$2.48, or 2.8 percent, to US$86.45.
Trading volume was thin ahead of the Labor Day weekend at 3.8 billion shares, 11 percent below the average volume for the year. Low volume can result in larger-than-usual moves in stock indexes. When fewer traders are active in the market, large buy and sell orders can move stock prices more than they would on a typical day.
The VIX, a measure of stock market volatility, rose 6.6 percent to 34. The index has fallen from a recent high of 48 on August 8, when the Dow lost 634 points following a downgrade of the US government's credit rating. The VIX traded below 20 for most of the year.
Fears of another recession led to wild market swings last month as global growth slowed and Europe's debt crisis flared up again. Consumer confidence plunged in August to a two-year low. A key category that tracks business investment fell sharply in July. Recent data were more encouraging, suggesting weak but steady economic expansion.
Source:shanghaidaily