Stocks Slide After Weak Jobs Report

Stocks were slumping Friday morning after the LaboUr Department reported that private-sector job creation remained weak in June and a report showed factory orders declined more than expected.

The LaboUr Department said 83,000 private-sector jobs were created. The consensus estimate had been that the economy had created 110,000 private-sector jobs.

At the same time, the economy shed 125,000 nonfarm jobs, the first decline in six months. But 225,000 of people who had lost jobs were workers who had been let go by the Census Bureau. The U.S. unemployment rate fell from 9.7 per cent to 9.5 per cent. That reflected a decline in the number of people seeking jobs.

President Barack Obama said the economy is improving, though not as fast as he would like.

Meanwhile, the Commerce Department said factory orders fell 1.4 per cent in May after eight straight monthly increases. Economists had expected a 0.8 per cent decline. Declines in transportation equipment orders were the biggest issue. Boeing (BA) is the biggest contributor to this category, and orders for new jets have fallen.

The Dow Jones industrials ($INDU) were off  91 points to 9,641. A loss Friday would be its seventh in a row. The Standard & Poor’s 500 Index ($INX) was down 9 points to 1,019, and the Nasdaq Composite Index ($COMPX) was off 16 points to 2,099. 

Private job growth was the focus of this employment report because it was expected that the decline in Census Bureau jobs would be so large.

Private-sector jobs have risen every month this year and are up 593,000 since December. But that growth slowed to a trickle in May, as the economy created just 33,000 jobs that month.

The  jobs report suggested it will take years for the economy to recover the 8 million-plus jobs lost since the recession began in December 2007.

The recession was caused in part by the financial market crash of 2008, the massive decline in basic industries such as steel and auto manufacturing, and by the exporting of millions of jobs overseas by employers seeking lower employment costs.

Only 10 of the 30 Dow stocks were higher, led by Verizon Communications (VZ) and Johnson & Johnson (JNJ), up 1.6 per cent to $26.78 and 0.6 percent to $59.45, respectively. Only 33 Nasdaq-100 stocks were higher, led by Biogen Idec (BIIB), up 5.9 per cent to $49.44.

Marketwatch.com said that French pharmaceuticals maker Sanofi-Aventis (SNY) was looking at Allergan (AGN) and Genzyme (GENZ) as acquisition targets. Allergan was up 7.6 per cent to $62.54, while Genzyme jumped 5.2 per cent to $52.44.

Crude oil was down 35 cents to $72.60. Gold was off $2.10 to $1,204.60. The euro was up 0.6 per cent to $1.25945. The 10-year Treasury yield was at 2.97 per cent, up from 2.927 percent on Thursday.

Apple (AAPL) was down 1.1 per cent to $245.72. The company disclosed that the formula it used to measure signal strength in its new iPhone 4 is faulty. A software fix will be available in a few weeks.