US stocks plunge after weak June jobs report

Despite preparing for a poor showing, the Dow Jones average plunged 124 points to close at 12,772. The US government reported that only 80,000 jobs were created in June, the third straight month of sluggish growth and weak hiring.

|
Richard Drew/AP
In this July, 2012 file photo. traders work in a booth on the floor of the New York Stock Exchange. Wall Street was poised for a slightly lower opening for Friday July 6, 2012, and guessed correctly, after June payrolls figures, released an hour before the bell reflected a still-sluggish economy.

Investors abandoned stocks Friday after the US government reported that only 80,000 jobs were created in June, the third straight month of weak hiring.

The Dow Jones industrial average fell 124.20 points to close at 12,772.47. The loss wiped out the Dow's gain for the week.

The reluctance of U.S. employers to add jobs shows that the economy is still struggling three years after the recession officially ended. An average of just 75,000 jobs were created every month in the April-June quarter, far below the 226,000 created every month in the first three months of the year.

"It shows the U.S. economy is losing momentum," said Sharon Stark, chief market strategist at the brokerage firm Sterne Agee. "It's a sign of everyone waiting to see what's next."

Of the 30 stocks in the Dow average, only five rose, including McDonald's and AT&T. The world's largest producer of aluminum, Alcoa, and Caterpillar, the construction equipment maker, were among the hardest-hit Dow stocks with declines of about 3 percent each. Materials and industrial companies are the most likely to suffer if the economy weakens.

The anemic jobs report led investors to shift money into low-risk assets. The price of the 10-year Treasury note rose, sending its yield down to 1.55 percent from 1.60 percent late Thursday. The dollar rose against the euro.

The sluggish growth in American jobs comes at a time when the global economy is also losing pace. Central banks in Europe and China took action Thursday to prop up their sliding economies.

The new signs of economic sluggishness around the world sent commodities prices lower. Crude oil dropped $2.77, or 3 percent, to $84.45 a barrel. The U.S. is the world's biggest oil consumer, and the prospect of lower demand pushed down prices.

Energy stocks followed the price of oil lower. Peabody Energy fell $1.27, or close to 5 percent, to $24.86, while Alpha Natural Resources declined 60 cents, or 6.5 percent, to $8.67.

In other trading on Wall Street, the Standard & Poor's 500 slid 12.90 points, or 0.9 percent, to 1,354.68 and the Nasdaq composite fell 38.79 points, or 1.3 percent, to 2,937.33.

One of the reasons stocks fell is that though the jobs report was weak, the country isn't heading into a recession. That suggests the Federal Reserve is less likely to take more action to stimulate the economy, according to Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds.

A new round of bond-buying by the Fed is "quite unlikely," Jacobsen said. The Federal Reserve has made two rounds of bond purchases since the financial crisis to keep interest rates low and encourage banks to lend money.

European markets also lost ground on Friday. A week after investors welcomed an agreement among European leaders to help Spain and Italy, the borrowing rates of both countries rose again. That means bond investors are less willing to loan those countries money at favorable rates.

The yield on the 10-year Spanish government bond rose 0.22 percentage point to 6.96 percent earlier in the day. That's a very high level and could eventually force Spain to seek more financial support from its neighbors in Europe.

European stock indexes slid. Germany's DAX and France's CAC-40 each lost 1.9 percent. Spain's benchmark index slumped 3 percent.

Other Wall Street stocks making big moves included:

Navistar International. The truck maker's stock fell $4.37, or over 15 percent, to $24.42 on investor worries that the heavy engine and truck maker will have to incur additional costs to get a crucial new engine approved by federal regulators.

Sequenom Inc. The stock fell 8 cents, or 2 percent, to $3.99 after a California court refused to block a competitor from selling a similar product to Sequenom's Down syndrome test for pregnant women.

Informatica Corp. The business software maker fell $12, or 28 percent, to $31.36 after warning that its second-quarter results didn't live up to the projections of its management or analysts.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to US stocks plunge after weak June jobs report
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2012/0706/US-stocks-plunge-after-weak-June-jobs-report
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe