Stocks drop as job data deepens economic woe

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks fell on Friday to close at their lowest level in 19 months after a report showed that employers unexpectedly shed jobs at the steepest rate in nearly five years, standing as confirmation for many investors that the United States is in recession.

Another bout of troubling news from mortgage companies hammered the market for a second day after Thornburg Mortgage (TMA.N: Quote, Profile, Research, Stock Buzz), a "jumbo" mortgage lender, said it failed to meet creditors' demands for more upfront cash and noted that its survival is at stake.

Before the opening bell, Wall Street got a shock when the Labor Department reported that 63,000 nonfarm jobs were lost in February -- in contrast to Wall Street economists' forecasts that 25,000 positions would be added -- while the government slashed in half the number of jobs added in December.

The data strongly hinted that U.S. demand for oil and metals would wane, hurting commodity prices and pulling down shares of energy and mining companies. Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) and Chevron (CVX.N: Quote, Profile, Research, Stock Buzz) were among the top drags on both the Dow industrials and the S&P 500, along with aluminum producer Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz), whose stock dropped 4.6 percent.

Investors also dumped shares of big industrial companies, including Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz), which slid 3.7 percent.

"The debate about recession has swung heavily in favor of the people that believe we are in one," said Ernie Ankrim, chief investment strategist for Russell Investment Group in Tacoma, Washington.

"We are obviously very close to compelling evidence that the economy will have a negative growth rate, at least for the first quarter. Do I recommend people jump in the stock market here? Only if they have iron stomachs."

The Dow Jones industrial average .DJI slid 146.70 points, or 1.22 percent, to end at 11,893.69. The Standard & Poor's 500 Index .SPX fell 10.97 points, or 0.84 percent, to 1,293.37 -- its lowest close since August 2006.