Wall Street fell sharply again today after the government's much-anticipated employment report showed weaker-than-expected job growth and...
NEW YORK — Wall Street fell sharply again today after the government’s much-anticipated employment report showed weaker-than-expected job growth and a rise in the unemployment rate.
The Dow Jones industrial average slid 256.54, nearly 2 percent, to 12,800.18.
Microsoft, one of the 30 Dow stocks, fell 99 cents today to $34.38 a share, and was down 4.8 percent for the week. Boeing, also a Dow stock, skidded $1.16 today to $85.82, and was off 2.8 percent for the week.
The technology-focused Nasdaq composite index, also pummeled by a downgrade of Intel, plunged 98.03, or 3.8 percent, to 2,504.65. The Standard & Poor’s 500 index tumbled 35.53, or 2.5 percent, to 1,411.63.
Most Read Business Stories
- Google puts lid on cookie jar and ends an internet era | Commentary
- MacKenzie Scott marries Seattle teacher after Bezos divorce
- FAA safety engineer goes public to slam the agency's oversight of Boeing's 737 MAX
- 55,000 in Washington state may have to pay back thousands in jobless benefits
- Microsoft’s $10 billion Pentagon deal at risk amid Amazon fight
The Labor Department’s report that employers raised payrolls by only 18,000 and that the nation’s unemployment rate rose to its highest level since November 2005 unnerved investors, who worried that a weakening job market will hurt consumer spending and tip the economy toward recession.
A better-than-expected reading on the nation’s service economy briefly pulled stocks off their lows but wasn’t enough to shake investors’ concerns.
Investors had been awaiting the jobs report for weeks as they tried to determine whether the economy would continue to benefit from robust consumer spending even as sectors like home construction, mortgage writing and manufacturing slow. Wall Street is concerned that areas of weakness could puncture growth if consumers can’t depend on a solid job market.
Manufacturers, construction companies and financial services companies all cut jobs during the month amid an anemic housing market. Retailers also made reductions.
The December report showed employers added the fewest jobs to their payrolls since August 2003. Economists had predicted a jobs growth figure of about 70,000 and an unemployment rate of 4.8 percent. Instead, unemployment climbed to 5 percent in December from 4.7 percent in November. While 5 percent unemployment is still considered good by historical standards, the increase from November clearly made some investors nervous.
“It’s a scary number, no question about it. No matter how good you wanted to feel about the economy averting a recession, there is far less conviction than even two or three days ago,” said Joe Balestrino, senior portfolio manager at Federated Investors.
Bond prices rose as investors sought the safety of government-backed debt after the employment reading. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.87 percent from 3.89 percent late Thursday.
A Federal Reserve announcement today that it is ramping up the amount of cash available to banks through a new auction process did little to calm the markets. After two auctions of $20 billion each, the Fed has now scheduled auctions Jan. 14 and Jan. 28 at $30 billion each.
The dollar was mixed against other major currencies. Gold prices, which have risen to nearly 30-year highs in recent days, declined.
Light, sweet crude fell $1.27 to settle at $97.91 a barrel on the New York Mercantile Exchange. Oil touched $100 a barrel this week for the first time, stirring concerns about inflation.
The employment figures overshadowed a report from the Institute for Supply Management, a business group, which said its December index of nonmanufacturing activity showed the nation’s service sector grew in December. However, the pace was slightly slower than in November and the index fell to 53.9 in December from 54.1 the prior month. Analysts had expected a deeper decline.
It’s been a difficult start to 2008 on Wall Street. After selling off in the final session of 2007 on Monday, investors spent the first three sessions of the new year absorbing a weaker-than-expected reading on the manufacturing sector, oil that reached $100 a barrel and today’s dismal employment numbers.
“It’s hard to point to any piece of data in recent weeks that makes you feel comfortable,” said Balestrino, noting that many bullish investors had hoped a strong jobs picture would lift Wall Street’s mood.
“This is the one piece that was holding up pretty well, and now it’s showing some weakness as well,” he said. “In our business it’s not the absolute number, it’s the direction of the number and especially the direction versus the expectations.”
In corporate news, a JPMorgan analyst lowered his rating on Intel to “neutral” from “overweight,” citing a drop in chip orders from computer manufacturers during the fourth quarter and high inventories. Intel, one of the 30 stocks that comprise the Dow industrials, fell $2, or 8.1 percent, to $22.67.