Business
US Records More Job Losses
Stocks fell Friday after the government reported that more jobs were lost in September than had been expected.
The decline in stocks was more moderate than the previous day’s big drop, but extended the market’s losses into a fourth straight day. After coming within 82 points of the 10,000 level last week, the Dow Jones industrials have pulled back about 4.5 percent.
The day’s news added to a recent string of bad indicators for the economy. The Labor Department reported that employers cut 263,000 jobs last month, up from 201,000 in August and worse than the 180,000 losses economists were expecting. The unemployment rate rose to 9.8 percent, in line with forecasts.
Unemployment has been one of the market’s biggest concerns throughout the recession because lost jobs mean trouble for nearly every part of the economy, from people defaulting on loans, cutting back their spending and getting forced into foreclosure on their homes. Most economists expect the rate to surpass 10 percent by early next year.
A surprise decline in factory orders Friday was also troubling investors. The Commerce Department said factory orders fell 0.8 percent in August following a 1.4 percent gain in July. Analysts had been expecting a 0.7 percent increase.
A spate of bad economic news this week has led to even more doubts that the 50 percent surge in stocks over the past six months can be sustained. On Thursday, the Dow tumbled more than 200 points after a disappointing report on manufacturing activity from the Institute for Supply Management dealt another blow to optimism that had been emerging about a recovery in the industrial sector.
Still, analysts were encouraged by Friday’s orderly trading, saying the modest decline is a sign that investors are willing to use pullbacks in their favour to pick up stocks they see as being cheap.
“Pullbacks are going to constantly be used as opportunities to get into the market,” said Hank Smith, chief investment officer of equity at Haverford Investments in Radnor, Pa.
At midday, the Dow fell 10.88, or 0.1 percent, to 9,498.40, after earlier falling as much as 79 points. The Standard & Poor’s 500 index fell 3.43, or 0.3 percent, to 1,026.42, and the Nasdaq composite index fell 4.56, or 0.2 percent, to 2,052.92.
About 3 stocks fell for every one that rose on the New York Stock Exchange, where volume came to 637.1 million shares, compared with 532.8 million at the same time on Thursday.
In other trading, the Russell 2000 index of smaller companies lost 2.72, or 0.5 percent, to 581.03.
Yields on long-term Treasurys hovered at their lowest levels since the spring. The yield on the benchmark 10-year Treasury note held steady at a five-month low of 3.18 percent.