Jobless data sends stocks reeling
NEW YORK — The stock market found little to celebrate heading into the long holiday weekend.
Major stock indexes fell more than 2.6 percent Thursday, pushing the Dow Jones industrials to their lowest level in six weeks, after the government said the unemployment rate hit a 26-year high and employers cut far more jobs than expected.
The data was especially disappointing since it broke a trend of four straight months of improvement in job losses. The report — one of the most closely watched gauges of the economy’s health — delivered the latest blow to the market’s already waning confidence.
Investor optimism has been shaken in recent weeks amid a barrage of mixed economic reports, making for an erratic market.
This past week was no exception. Stocks rose Monday, then erased nearly all their gains the following day after a report showing an unexpected drop in consumer confidence.
On Wednesday, the market bounced back after getting some reassuring data on manufacturing and housing, only to tumble again on Thursday on the disappointing jobs report.
“There’s not a lot of conviction on either side,” said Jill Evans, co-portfolio manager of the Alpine Dynamic Dividend Fund.
The Dow Jones industrials lost 223.32, or 2.6 percent, to 8,280.74, the lowest close since May 22. It was the average’s worst day since April 20.
The Standard & Poor’s 500 index fell 26.91, or 2.9 percent, to 896.42 and the Nasdaq composite index fell 49.20, or 2.7 percent, to 1,796.52.
Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange.
Consolidated volume came to a relatively low 3.56 billion shares ahead of the holiday weekend, compared with 4 billion shares traded a day earlier. Light volume can lead to more volatile swings in trading.
Trading on the New York Stock Exchange was extended until 4:15 p. m. Eastern time in order to execute customer orders impacted by system irregularities, an NYSE spokeswoman said.
The stock market rallied furiously this spring off of 12-year lows beginning in early March on hopes for a recovery, but the upward momentum has stalled since mid-June as doubts grow about whether the economy had really found a bottom.
Since hitting multi-month highs on June 12, the Dow has fallen a total of 5.9 percent, while the S&P 500 index has lost 5.3 percent.
“There’s more and more evidence mounting against this rally continuing,” said Doug De Groote, a managing director at United Wealth Management. Consumers are likely to lead the nation out of the ongoing recession, but that won’t happen if more people are losing their jobs, he said.
Stocks started the day down and stayed there after the Labor Department reported that employers slashed 467,000 jobs in June, far worse than the 363,000 that economists expected and a grim signal that the path to recovery will be bumpy. The unemployment rate rose to 9.5 percent from 9.4 percent the month before.
Overseas markets also fell Thursday after a report showed unemployment in Europe rose to a 10-year high in May.
Meanwhile a gauge of volatility in the stock market, the Chicago Board Options Exchange Volatility Index, or VIX, jumped 1.73, or 6.6 percent, to 27.95 Thursday afternoon.
Markets will be closed today in observance of the Independence Day holiday.
For the week, the Dow finished down 1.9 percent; the S&P 500 lost 2.5 percent; and the Nasdaq fell 2.3 percent.
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