Dow Tanks, Closes Down 253 Points On Dismal Jobs Report

NEW YORK (CBSNewYork/AP)Hurricanes. Earthquakes. And now, another stock market slide.

WCBS 880’s Paul Murnane At A Jobs Center In Hicksville

The Dow Jones industrial average lost 253 points, or 2.2 percent, to close at 11,240. The S&P 500 index fell 30, or 2.5 percent, to 1,174. The Nasdaq fell 66, or 2.6 percent, to 2,480.  Treasury yields fell sharply and gold jumped $48 an ounce as cash flowed into investments considered less risky than stocks.

Five stocks fell for every one that rose on the New York Stock Exchange. Trading volume was 3.8 billion shares, lower than average.The losses wiped out the week’s gains.

1010 WINS’ Stan Brooks Reports

The reason? The weakest jobs report in almost a year is fueling fears that the U.S. may slide back in to another recession.

No new jobs were created last month, the government said early Friday. It was the worst report in 11 months. The unemployment rate held steady at 9.1 percent. It has been above 9 percent in all but two months since May 2009.

All 30 stocks in the Dow fell. Only one, Verizon Communications Inc., briefly turned positive.

The losses wiped out most of this week’s gains, leaving the Dow up just 0.3 percent. Stock indexes rose last week for the first time in five weeks.

Volume was thin ahead of the holiday weekend. Shares dropped Thursday, breaking a four-day rally. Analysts said many traders had sold shares before taking off a day early.

The weakness of the Labor Department’s closely watched jobs report surprised investors. Previously reported job addition figures for June and July were also revised lower. The average work week declined and hourly earnings fell.

The report further dampened hopes that the economy will improve in the second half of the year. Stagnant hiring and declining wages leave consumers with little money to spend. Consumer spending accounts for 70 percent the U.S. economy.

Cash poured into investments seen as lower-risk after the dismal jobs news. The yield on the 10-year Treasury note fell to 2.04 percent, from 2.14 percent shortly before the report came out. Bond yields rise as their prices fall.

The price of gold rose 2.8 percent to $1,880. Fears that a stalling economy could reduce demand for oil and gasoline pushed benchmark crude oil down $1.90, or 2.1 percent, to $87.03 in early-afternoon trading.

The VIX, a measure of market volatility, rose 3 percent to 33. The index has fallen from a recent high of 48 on Aug. 8, when the Dow lost 634 points following a downgrade of the U.S. government’s credit rating. It traded below 20 for most of the year.

Fears of another recession grew last month after markets swung wildly and global growth slowed. Consumer confidence plunged in August to a two-year low. A key category that tracks business investment fell sharply in July. Recent data were more encouraging, suggesting weak but steady economic expansion.

European stocks fell as negotiations about Greece’s shaky finances appeared to break down. The fell even more after the U.S. jobs report. Germany’s DAX closed down 3.4 percent and France’s CAC-40 fell 3.6 percent.

Bank of America Corp., the nations’ largest bank, sank 7 percent after The Wall Street Journal reported that regulators asked it to develop emergency plans because of its sagging share price and the weakening economy. Bank of America is down 44 percent this year, largely on concerns about legal costs related to shoddy mortgage investments that it sold.

Other big banks dropped on separate reports that the government is preparing to sue some of them, also over mortgage investments they sold that lost value when the housing market collapsed. The regulator of Fannie Mae and Freddie Mac says banks lied about the quality loans that they pooled. Goldman Sachs Group Inc. fell and Morgan Stanley fell about 4.5 percent. Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. lost about 3.5 percent

Netflix Inc. plunged more than 9 percent after talks collapsed with a key provider of movies and shows. Starz Entertainment said late Thursday that it won’t renew a contract that allows Netflix to stream recently released movies and TV shows online.

The Dow, S&P and Nasdaq all had their worst August since 2001 as economic fears and instability in financial markets and European banks added to investors’ worries.

Are you worried about the possibility of another recession? Sound off in our comments section.

  • Pat Johnson

    History has a short memory it was the Republican President in 1969
    Richard M.Nixon that opened the “Bamboo Curtain” to China for his big business
    cronies to start manufacturing motors,tools,and electronic equipment as they
    would save alot of money then keeping factories here,it was a good way to make a bigger profit and now we all pay for it and China ,starts telling us what to do and hold70% of our Treasury notes which we must pay China interest on,they could kill we Americans by dumping them at a loss,a loaf of bread as in pre Nazi germany
    would cost $500.00. Ah ! history is cruel.

    • Slim Pickens

      Who rammed NAFTA down our throats?

  • Katherine Appello

    Not surprised, as government is not the entity responsible, nor should it ever be, for creating jobs. They are there to create few, but smart and enforceable laws, keep taxation and revenue low to facilitate business in the U.S. but it is the private sector that should be creating most of the jobs. I should never be government, as we are not meant to be Socialist or Communist.

    • Slim Pickens

      Government policies did a pretty good job of exporting jobs, didn’t they.

  • Slim Pickens

    Your do’in a heck of a job Obomby.

  • BX Jim

    What do they mean, “another” recession. When exactly did we come out of the last one?

  • Joe

    Tell GE to start paying taxes

    Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change Hope & Change

  • Carmine L

    Edy you are so right. Have anyone noticed when you call a 1-800 number more likely you will be speaking with someone overseas. Please do like I do and asked to be transferred back to the states. If they just bring back half the jobs the moved off-shore you cut the unemployment in half. When they moved the jobs overseas there were nothing to fill the void

  • Dee Tee

    @ edy — I’m with you and it’s time for all Americans to take a stand. Stop shopping with the companies that don’t hire here at home!!

  • Ellen

    Went to Walgreens the other day and saw slippers they were selling all made in China. I told the sales clerk that is there anything in that store not made in China, and she said only the employees working here.

  • edy

    The economy did add jobs…just not in the USA. They were added in India, China and third world countries. What did you expect. What did the stock market expect. Wake up America and boycott all companies that ship our jobs overseas so that the big fat CEOs can line their pockest with more money.

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