Related News

Home » Business » Finance

Jobless data sends stocks reeling; Dow loses 223

A SOUR report on job losses in June sent stocks sharply lower yesterday.

Major stock indexes fell more than 2.6 percent after the government said the U.S. unemployment rate hit a 26-year high. The Dow Jones industrials closed at their lowest level in six weeks.

Trading on the New York Stock Exchange was extended until 4:15 pm Eastern time (2015 GMT) in order to execute customer orders impacted by system irregularities, an NYSE spokeswoman said.

As investors sold off stocks amid fresh concerns about the economy, they moved into the safety of bonds, pushing Treasury yields lower.

Recession-weary employers in the U.S. slashed 467,000 jobs in June, the Labor Department reported, far worse than the 363,000 that economists expected and a grim signal that the path to recovery will be bumpy. The jobless rate rose to 9.5 percent from 9.4 percent in May.

The report - one of the most closely watched economic indicators - disappointed investors who had become encouraged by positive signs recently that key areas of the economy including housing and manufacturing were showing modest signs of improvement.

The stock market rallied furiously this spring off of 12-year lows beginning in early March on hopes for a recovery, but the upward momentum stalled in mid-June as doubts began to emerge about whether the economy had really found a bottom. The June jobs report was the latest blow to the market's confidence.

"There's more and more evidence mounting against this rally continuing," said Doug De Groote, a managing director at United Wealth Management. Consumers are likely to lead the nation out of the ongoing recession, but that won't happen if more people are losing their jobs, he said.

Shares of consumer products companies were among the hardest hit yesterday.

The Dow Jones industrials lost 223.32, or 2.6 percent, to 8,280.74, the lowest close since May 22. It was the average's worst day since April 20.

The Standard & Poor's 500 index fell 26.91, or 2.9 percent, to 896.42 and the Nasdaq composite index fell 49.20, or 2.7 percent, to 1,796.52.

The market's recent rally pushed stock prices back to reasonable levels after they were severely undervalued, said Tim Courtney, chief investment officer at Burns Advisory Group.

With stocks prices back in more normal pricing ranges, "they look less cheap, so bad news like this really starts to sway prices," Courtney said of the unemployment report.

Overseas markets also fell after a report showed unemployment in Europe rose to a 10-year high in May.

"This is part of the market recovery," said Roy Williams, CEO of Prestige Wealth Management. "You're going to get bad news." Williams predicted the unemployment rate is likely to reach 11 percent.

As stock prices fell across the board, other signs of investor unease emerged. Treasury prices rose, driving the yield on the 10-year note down to 3.50 percent from 3.54 percent late Wednesday.

Meanwhile a gauge of volatility in the stock market, the Chicago Board Options Exchange Volatility Index, or VIX, rose 1.66, or 6.3 percent, to 27.88 yesterday afternoon.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange.

Volume came to a relatively low 733.6 million shares ahead of the holiday weekend, compared with 951.1 million shares traded at the same point Wednesday. Markets will be closed Friday in observance of the Independence Day holiday.

Light volume can lead to more volatile swings in trading.

An upbeat report about May factory orders was not enough to boost traders' confidence amid the weak employment numbers. The Commerce Department said total orders rose 1.2 percent in May, better than the 0.8 percent increase that economists had expected.

Markets kicked off the third quarter on Wednesday with gains after getting some reassuring data on manufacturing and housing. Traders were encouraged by a report showing more stable manufacturing activity and another indicating the fourth straight monthly rise in pending home sales.

The dollar rose against most other major currencies, while gold prices fell.

The Russell 2000 index of smaller companies fell 19.61, or 3.8 percent, to 497.85.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend