Wall Street finished a disheartening week sharply lower yesterday after a government report showing the slowest job growth in nearly two...
NEW YORK — Wall Street finished a disheartening week sharply lower yesterday after a government report showing the slowest job growth in nearly two years exacerbated concerns about the health of the economy. Steadily climbing oil prices, which topped $55 per barrel, helped push the major indexes to losses for the week.
The Dow Jones industrial average fell 92.52 to 10,460.97.
Microsoft, one of the 30 Dow stocks, slid 36 cents yesterday to close at $25.43 a share. Boeing, also a Dow stock, gained 28 cents to $64.66, a 52-week high. For the week, Microsoft was off 2.5 percent, while Boeing was up 2.6 percent.
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Broader stock indicators also lost ground. The Standard & Poor’s 500 index was down 8.27 at 1,196.02, and the Nasdaq composite index lost 26.37 to 2,071.43.
For the holiday-shortened week, the Dow lost 0.77 percent, the S&P fell 0.23 percent and the Nasdaq dropped 0.21 percent.
Investors were disappointed in the Labor Department’s non-farm payroll report, which said only 78,000 jobs were created in May, down significantly from the 274,000 new jobs in April and far less than the 185,000 economists had forecast. It was the worst showing for the monthly payroll report since August 2003.
However, some investors speculated that the jobs report, along with other data this week showing a slowdown in economic growth, would prompt the Federal Reserve to halt its policy of raising interest rates sooner than expected.
“The big takeaway here is that this increases the likelihood that the Fed will move to the sidelines sooner rather than later,” said Michael Sheldon, chief market strategist at Spencer Clarke. “Otherwise, there are a lot of mixed signals on the economy right now, which makes it difficult to forecast.”
Oil prices rose $1.40 to $55.03 a barrel on the New York Mercantile Exchange, more than making up for a decline on Thursday, as investors feared stronger-than-expected global demand.
The climb in oil prices and increasing economic uncertainty pressured stocks throughout the week, though the markets showed surprising resistance to profit-taking earlier in the week. Treasury bond yields sank to their lowest levels since March 2004 in early trading yesterday as the disappointing jobs report spurred more buying by investors hedging against a sluggish economy. However, those unattractive bond yields led to a sell-off as the session wore on, and the yield on the 10-year Treasury note rose to 3.98 percent from 3.90 percent late Thursday.
The dollar rose against the euro as Italy’s labor minister suggested a referendum to abandon the euro and bring back the lira.
Adding to the disappointing jobs report, the Institute for Supply Management’s services index came in at 58.5 for May, down from 61.7 in April and less than the 60 reading Wall Street had expected. A reading above 50 indicates expansion.
With the economic data mixed at best and, at worst, showing a faster slowdown in growth than many had expected, the pressure will be on Fed Chairman Alan Greenspan to justify continually raising the nation’s benchmark interest rate, which stands at 3 percent, when he testifies on Capital Hill about the economy Thursday.
“This jobs figure has completely changed the debate on interest rates,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “It went from the Fed pausing at around 3.5 to 4 percent, to maybe a three-and-a-quarter to 3.5 percent pause.”
The Fed has raised rates by a quarter percentage point at each of its last eight meetings. The Fed’s Open Market Committee, which sets rates, meets again June 29-30.
Chief investment officer
at Harris Private Bank