Jobless figures hit hopes of recovery
US stocks tumbled yesterday, driving the S&P 500 down to its third-straight weekly loss, as a steeper-than-expected slide in June non-farm payrolls revived caution about economic recovery prospects.
News that US employers shed nearly half a million jobs last month and the unemployment rate jumped to 9.5 per cent, the highest in nearly 26 years, dampened recent hopes that the recession might be abating.
Investors pummeled stocks across the board, but energy, industrials, financials, technology and consumer-oriented shares were among the hardest-hit sectors.
These sectors were at the forefront of the broader market’s recent recovery from the 12-year closing lows of early March as investors bet that the worst of the economic slump was over.
All told, the jobs data served as a reality check and signalled that any recovery will not be smooth sailing, analysts said.
“Quite frankly, rising unemployment is bad for the entire economy,” said Sasha Kostadinov, portfolio manager at Shaker Investments.. “It’s not positive for discretionary stocks. It’s not positive for financials because there’s a direct correlation between the high unemployment rate and charge-offs and delinquent payments.”
The Dow Jones industrial average dropped 223.32 points, or 2.63 per cent, to 8,280.74. The Standard & Poor’s 500 Index slid 26.91 points, or 2.91 per cent, to 896.42. The Nasdaq Composite Index sank 49.20 points, or 2.67 per cent, to 1,796.52.
The S&P 500 fell for a third straight week. But it’s still up 32.5 per cent from the 12-year closing low of March 9.
For the week, the blue-chip Dow average slipped 1.9 per cent, while the S&P 500 dropped 2.5 per cent and the Nasdaq lost 2.3 per cent.
Light volume due to Wall Street’s thinly staffed trading desks accentuated yesterday’s sell-off.
Additionally, the New York Stock Exchange was hit by glitches that affected orders originating from the trading floor. The NYSE extended its regular close from 2000 GMT to 2015 GMT to execute customer orders affected by system irregularities.