Dow plummets on June nonfarm payrolls, retailers take a hit - UPDATEReported by Proactive Investors on Friday, 6 July 2012 (on July 6, 2012)
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US stocks plunged early Friday after the weak June jobs numbers, giving Mitt Romney some amunition against President Barack Obama's policies on the campaign trail.
The Dow was lately down 150 points, or 1.2%, while the S&P 500 and the Nasdaq saw similar percentage losses.
Nonfarm payroll employment continued to edge up in June, but the expansion was lower than expected with 80,000 net adds. The consensus forecast, according to Bloomberg, was for 90,000 additions.
The unemployment rate was unchanged at 8.2 per cent - in line with forecasts - the U.S. Bureau of Labor Statistics reported today, but still "unacceptably high", said Romney.
The government bureau said that in the second quarter, employment growth averaged 75,000 per month, compared with an average monthly gain of 226,000 for the first quarter of the year, showing slowing growth.
Meanwhile, the change in total nonfarm payroll employment for April was revised lower from a gain of 77,000 to 68,000, while the change for May was revised higher from plus 69,000 to a gain of 77,000.
"Disappointing jobs number this morning that will give fuel to the bears as evidenced by today’s decline," said president of Padlock Invesment Management, Don Lato.
"With this number out of the way, investors can now go back to focusing on earnings which will start to be reported in earnest next week. Expectations have been lowered over the last few weeks and so even with the poor macro environment, an average to above average ratio of positive surprises is entirely possible."
The disappointing jobs report for June came a day after retailers reported dismal sales for last month - the smallest pace growth in three years - raising concerns that consumers may tighten the belts on spending heading back into the back-to-school season.
The jobs data prompted further concern for retailers, who saw their shares tumble Friday morning. Abercrombie & Fitch (NYSE:ANF) was down 3.6%, while The Gap (NYSE:GPS) fell 0.5%.
Europe equity-market losses were led by Spanish stocks, which fell after bond yields on the country's 10-year government paper came dangerously close to the 7% level.
Earlier in the day, International Monetary Fund managing director Christine Lagarde said growth indicators had “become more worrisome." She said that many gauges of economic activity had deteriorated across the globe - in emerging markets, as well as Europe and the US.
Meanwhile, Britain's Serious Fraud Office announced it would formally begin a criminal investigation into allegations that banks attempted to rig Libor, an important interest rate benchmark.
Libor, the London interbank offered rate, is used to price financial instruments around the globe. UK bank Barclays (LON:BARC) (NYSE:BCS) last week paid around $450 million in fines to settle a probe by U.S. and British regulators, a trading scandal that has seen three senior officials of the bank resign, including CEO Bob Diamond.
Britain's FTSE 100 was lately down 0.68%, the CAC 40 fell 1.33% and Germany's DAX retreated 1.46%. Spain's IBEX 35 tumbled more than 2.2%.
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