Jobless rate spike sinks Dow,
sends S&P to 3-year low

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By Amy Baldwin
Associated Press

NEW YORK >> A worse-than-expected unemployment report ignited another dizzying selloff today, sending the Dow Jones industrials tumbling more than 230 points and the Standard & Poor's 500 index to its lowest level in nearly three years.

Analysts blamed the losses on Wall Street's growing fears that the economy is worsening and more bad news, rather than a turnaround, is ahead.

"The unemployment rate was higher than we anticipated and people are concerned that the economic slowdown isn't showing signs of recovery," said Robert Harrington, head of listed block trading at UBS Warburg.

The Dow closed down 234.99, or 2.4 percent, at 9,605.85. That was its lowest close since April 4, but still 216 points above its weakest finish for the year. The Standard & Poor's 500 index fell 20.62, or 1.9 percent, to 1,090.65, its weakest finish this year and lowest close since October 1998. The Nasdaq composite index fell the least of the three major benchmarks but still recorded its worst close since April 4, down 17.94, or 1.1 percent, at 1,687.70, about 49 points from its 2001 low point.

For the week, the Dow lost nearly 3.5 percent, the Nasdaq fell 6.5 percent and the S&P fell 4.2 percent.

Decliners led advancers nearly 3 to 1 on the New York Stock Exchange in moderate trading, with 2,177 down, 895 up and 233 unchanged. Volume was 1.41 billion shares vs. 1.04 billion yesterday. The NYSE composite index fell 11.14 to 566.17, the American Stock Exchange composite index lost 6.91 to 856.42 and Russell 2000 index fell 8.20 to 445.19.

The Treasury's 10-year note rose 2232 to 1012232; its yield fell 9 basis points to 4.78 percent. The 30-year bond rose 1932 to 100 - 132; its yield fell 4 basis points to 5.37 percent.

The selling began early in the session on a Labor Department report showing the nation's unemployment rate soared to 4.9 percent in August -- its highest level in nearly four years -- and businesses slashed 113,000 jobs as the slumping economy continued to hammer the labor market.

Investors punished retailers today out of fear the slowdown would hurt consumer spending and confidence. Consumer spending accounts for two-thirds of the economy, and Wall Street is terrified that any decrease could put already fragile businesses in even worse positions than they are now.

Home Depot dropped $2.60, or 6 percent, to $40.95, while Wal-Mart lost $1.15 to $46.22.

"People are getting increasingly concerned that the consumer, who has held the economy up so far, will begin to retrench and the economy will lose what little momentum it has and this will turn into a recession," said Bob Barker, investment consultant at Dain Rauscher.

So far the U.S. economy has managed to steer clear of a recession, commonly defined as two consecutive quarters of negative growth, though the nation's second quarter growth numbers were only 0.2 percent -- its slowest pace in eight years. The pessimism extended to manufacturing and financial stocks. American Express slid 88 cents to $34.40 on fears a consumer and business slowdown would hurt the broader sector. And Boeing tumbled $3.54 or 8 percent to $45.30 after a Morgan Stanley analyst downgraded the airplane manufacturer citing slowing orders.

Intel fell 21 cents to $25.89 despite its reiteration yesterday that its revenues would be in line with expectations.