Stocks fall sharply after jobs report
NEW YORK » Wall Street ended a dreadful week with another big loss yesterday after the government surprised investors with a report that employers eliminated 63,000 jobs last month. The news compounded fears that the U.S. economy, already hampered by an unrelenting credit crisis, is succumbing to recession.
The Dow Jones industrial average fell 146 points, bringing its two-day slide to 370. This week's declines in the three major stock indexes to their lowest settlements since 2006 came despite the Federal Reserve's announcement that it would take steps to aid the credit markets.
The Labor Department's report that employers cut jobs by 63,000 last month -- the most since March 2003 -- unnerved investors worried about the health of the economy and who had been expecting a 25,000 gain in jobs. While the unemployment rate fell to 4.8 percent, the decline reflects people leaving the labor force.
The payroll numbers arrived minutes after the Federal Reserve announced it would take fresh steps to ease credit troubles, including boosting the amount of money it will auction to banks.
The central bank said it will increase the size of its March 10 and 24 auctions to banks to $50 billion each. The auctions had been slated for $30 billion apiece and Fed officials said subsequent auctions could be bigger if need be. The Fed also said that it would begin a series of repurchase transactions expected to reach $100 billion.
Craig Peckham, an equity trading strategist at Jefferies & Co., said besides the weak job figures, investors were worried about an apparent lack of effectiveness of the Fed's campaign.
"There is a growing sense that the Fed is trying to pull out all the stops and use all the tools they have but with little net effect," he said. "It just doesn't appear to be the quick-fix that investors had been hoping for. What we've seen is people continuing to press very bearish bets."
The Dow fell 146.70, or 1.22 percent, to 11,893.69. On Thursday, the Dow's 214-point drop came on resurgent concerns about the health of the credit markets. The index has not closed below 11,900 since October 2006, but on Jan. 22 dropped during intraday trading to 11,634.82.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 10.97, or 0.84 percent, to 1,293.37 -- its lowest settlement since August 2006.
The Nasdaq composite index fell 8.01, or 0.36 percent, to 2,212.49, the lowest the tech-dominated index has finished since September 2006.
Bond prices jumped as investors sought defensive positions amid concerns about the economy. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.54 percent from 3.59 percent late Thursday.
It's been a rough week for Wall Street -- the Dow fell 3.04 percent, the S&P fell 2.80 percent and the Nasdaq fell 2.60 percent. The Russell 2000 index of smaller companies fell 2.67, or 0.40 percent, to 660.11.
Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange. Consolidated volume came to 4.44 billion shares, up from 4.18 billion on Thursday.
The market had been eager for a read on the jobs picture. While unemployment remains low by historical standards the increase in unemployment stirred concern among investors worried that it will result in a consumer slowdown. The well-being of the consumer, whose spending accounts for more than two-thirds of economic activity, is key to investors' hopes of avoiding more economic pain amid the ongoing pullback in home values and credit troubles.
The start of the week had been relatively quiet. While the closing numbers belied some of the volatility Wall Street had to contend with in the early part of the week, investors' indecision turned to fear Thursday when credit concerns took on new life.
The week also saw the dollar continue to drop, helping push several commodities to record highs. Many commodities are traded in dollars and so a weak greenback can make their prices rise. Gold, often regarded as a defensive investment, surged to near the psychological benchmark of $1,000 an ounce.
Light, sweet crude slipped 32 cents to close at $105.15 per barrel on New York Mercantile Exchange, but only after briefly surpassing $106.