Stocks slide after jobs data
NEW YORK (Reuters) - Stocks tumbled on Friday, driving major indexes down nearly 2 percent, as data showing the first monthly drop in payrolls in four years stoked fears on Wall Street that the economy was headed into recession.
Stocks across the board dropped sharply after the Labor Department said U.S. employers cut a net 4,000 jobs in August, when turmoil in the subprime mortgage market led to a tightening of corporate credit and heightened concerns about the wider economic impact.
The report cemented expectations the Federal Reserve would cut interest rates when policymakers meet on September 18.
Anxiety about next week's anniversary of the September 11 attacks further soured the mood on Wall Street. Al Qaeda leader Osama bin Laden, in an unauthenticated video circulated on the Internet, said the United States was still vulnerable to attacks.
But the main focus was on the economy as shares of industrial companies, which often react to economic cycles, fell sharply. Caterpillar Inc., was down 3.1 percent at $73.44, while Honeywell International Inc., was down 3.4 percent at $54.71.
Computer-related companies, which had been outperforming the broader market, were among the top drags. Chip maker Intel Corp. fell 2.6 percent to $25.47.
The jobs data "was so negative and bad, now the recession fear is jumping back into the market," said Scott Wren, senior equity strategist at A.G. Edwards & Sons Inc., in St. Louis.
The Dow Jones industrial average ended down 249.97 points, or 1.87 percent, at 13,113.38. The Standard & Poor's 500 Index was down 25 points, or 1.69 percent, at 1,453.55. The Nasdaq Composite Index closed 48.62 points lower, or 1.86 percent, at 2,565.70.
The Dow was down 1.8 percent for the week, while the S&P 500 shed 1.4 percent and the Nasdaq fell 1.2 percent. For the S&P, it was the worst week since the beginning of August, while the Dow had its worst week since the week ended July 29.
After the close, shares of Countrywide Financial Corp. rose 2.1 percent to $18.60 in extended trade after the mortgage lender announced plans to cut up to 12,000 jobs.
The drop in payrolls, reported before the market's opening bell, came as a surprise since economists' consensus forecast was for the creation of 110,000 jobs. Payroll growth in July and June was also revised sharply lower.
Interest-rate futures reflecting expectations for a half-percentage-point cut in U.S. benchmark rates, followed by further cuts, jumped aggressively following the data.
U.S. staffing companies' shares dropped, with a gauge of staffing and human resources stocks, the Standard & Poor's HR Employment Services index, down 2.7 percent.
Shares dependent on discretionary spending fell as speculation mounted that consumers will tighten their grip on their wallets in the face of a weakening housing and employment climate.
Luxury jeweler Tiffany & Co shares were down 2.6 percent at $49.29 on the New York Stock Exchange, while automaker General Motors slumped 4.8 percent to $29.55. Continued...
Economy and Fed in spotlight
