Dow Jones takes 275 point hit after bad jobs report

By Agence France-Presse
Friday, June 1, 2012 18:02 EDT
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NEW YORK — US stocks dropped more than two percent Friday, with the Dow turning negative for the year for the first time, after poor labor market figures showing a meager 69,000 jobs were added in May.

That combined with dismal data on industry from the US, Europe, China and elsewhere to produce a picture of a sharply slowing global economy, sending bulls for the doors on Wall Street.

The Dow Jones Industrial Average closed down 274.88 points (2.22 percent) at 12,118.57.

That left the Dow down 0.81 percent for the year, the first time the blue-chip index has gone into the red in 2012.

The broad-based S&P 500 fell 32.29 points (2.46 percent) to 1,278.04, while the Nasdaq Composite sank 79.86 (2.82 percent) to 2,747.48.

Losses came across the board, with banks hit the hardest, following in the path of earlier sharp market drops in Europe.

“It’s an ugly day for US stocks, as a disappointingly weak report on May payrolls has thoroughly rattled investors,” said Elizabeth Harrow of Schaeffer’s Investment Research.

Purchasing manager indices for May from China, India, the eurozone and the US were all lower, signaling more slow growth around the globe.

And US household income and spending data for May showed Americans are tapping more into their savings, likely a signal of more strain on spending increases.

The data sent oil prices plummeting alongside stocks, with interest rates in the United States hitting new lows.

“A torrent of recent economic data now reveals weakness, and investors are beginning to take notice,” said Peter Schiff of Euro Pacific Capital.

Banks took the hardest hits: Bank of America lost 4.5 percent, JPMorgan Chase 3.7 percent, Wells Fargo 5.9 percent, and insurer AIG 6.8 percent.

Plays on consumer spending in the US and China were also pummeled.

Yum Brands, the owner of Kentucky Fried Chicken, Pizza Hut and Taco Bell, plunged 8.0 percent, while rival McDonald’s lost 2.9 percent.

Apple dropped 2.9 percent and Starbucks fell 5.0 percent.

On the Nasdaq, big disk drive producers Seagate and Western Digital continued to tumble after analyst downgrades. Seagate lost 7.2 percent and Western Digital 4.1 percent; the two were down 17 and 12 percent respectively for the four-day week.

Oracle was down 1.8 percent and Google fell 1.7 percent after a federal judge on Thursday put a stake in the heart of Oracle’s big-money lawsuit against Google Thursday.

Bond prices, already at record highs, rose sharply again. The yield on the 10-year Treasury bond dropped to 1.47 percent from 1.58 percent Thursday, while the 30-year fell to 2.54 percent from 2.67 percent.

Bond prices and yields move in opposite directions.

Photo via AFP

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
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