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Portfolio > Economy & Markets > Stocks

Stock Market Battered on Disappointing Jobs Report

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Labor Department

The Dow Jones industrial average dropped 323 points, its second worst slide of the year. The index closed below 10,000 for the second time in two weeks. All the major indexes were down more than 3%. The concerns about Hungary pounded the euro to a four-year low.

The Dow fell 323.31, or 3.2%, to 9,931.97, its steepest drop since May 20. All 30 stocks that make up the index fell. The Standard & Poor’s 500-index fell 37.95, or 3.4%, to 1,064.88, while the Nasdaq composite index dropped 83.86, or 3.6%, to 2,219.17.

Fewer than 300 of the nearly 3,000 stocks that trade on the New York Stock Exchange rose. Volume came to 1 billion shares compared with 850 million traded at the same point Thursday.

For the week, the Dow lost 2%, its third straight weekly drop. The S&P 500 index fell 2.3% and the Nasdaq dropped 1.7%.

Retailers were among the hardest hit stocks after investors bet that a weak job market would discourage consumers from spending. Financial stocks also fell sharply on concerns that borrowers would continue having problems paying their bills. Banks were further hurt by worries about their vulnerability to Europe’s increasing troubles.

The government’s May jobs report was an unpleasant surprise for investors who had grown a little more upbeat about the domestic economy the past few days. The Labor Department said private employers hired just 41,000 jobs in May, down dramatically from 218,000 in April and the lowest number since January. The unemployment rate fell to 9.7% from 9.9% in April.

The news made it clear that the economic recovery isn’t yet picking up the momentum that investors have been looking for.

“People are looking for one turning point,” Daniel Penrod, senior industry analyst for the California Credit Union League, said of the monthly jobs report. “That’s not realistic. This growth will be much slower and more gradual than in the past.”

The jobs report was the latest in a series this week that showed the economy isn’t as robust as hoped. But investors had sent stocks higher as they bet on stronger job growth in May. The reality of the report erased that optimism.

“It’s almost as if the worst fears of the market were realized, at least in this one report,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.

Meanwhile, the spokesman for Hungary’s prime minister described the country’s economy as being in a “grave” situation. However, he said, the government is ready to avoid a crisis like the one being faced by Greece, which had to be bailed out by the European Union. Spain and Portugal are also struggling.

The euro slipped to $1.1992 in afternoon trading in London, its lowest level since March 2006. The currency was down from $1.2162 late Thursday.

European stocks closed sharply lower. The CAC-40 in France was down 2.9% and the broad Euro Stoxx 50 shed 1.8%.


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