Jobs report rattles investors

he Irish drug maker sells a stake in the business and launches new partnerships with Johnson & Johnson. The New Brunswick, NJ-based J&J said it is also buying Elan's stake in an Alzheimer's disease treatment partnership with Wyeth ( WYE - news ...

Stocks slump after June employment report. Dow, S&P 500 and Nasdaq all down over 2%.
By Alexandra Twin, CNNMoney.com senior writer
Last Updated

NEW YORK (CNNMoney.com) -- Wall Street retreated Thursday, with the major market gauges all off at least 2%, as a worse-than-expected jobs report exacerbated fears that the recession could drag on longer than has been thought.

The Dow Jones industrial average (INDU) fell 175 points, or 2.1%, with 2 hours left in the session. The S&P 500 (SPX) index lost 21 points, or 2.3%, and the Nasdaq (COMP) fell 44 points, or 2.4%.


Employers cut 467,000 jobs from their payrolls in June, after cutting 322,000 jobs in May, the Labor Department reported Thursday. That made June the first month in four in which job losses rose from the previous month. Economists surveyed by Briefing.com expected 365,000 job losses.

The unemployment rate, generated by a separate survey, rose to 9.5% from 9.4%, short of forecasts for an increase to 9.6%.

"The report was terrible," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc."It's telling us that there is a lot more pain than people realize that we are going to have to get through before there can be a recovery."

On the move: Declines were broad based, with all 30 Dow stocks falling, led by oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). IBM (IBM, Fortune 500), Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500) and Wal-Mart (WMT, Fortune 500) were the other big losers.

Economically-sensitive trucking and railroad stocks plunged, dragging down the Dow Jones Transportation (DJT) average by over 3%.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by over four to one on volume of 440 million shares. On the Nasdaq, decliners beat advancers four to one on volume of 1.25 billion shares.

All financial markets are closed Friday for the Independence Day holiday.

Weak start to new quarter: Stocks climbed Wednesday on the first day of the third quarter as investors found some encouragement in the day's housing and manufacturing reports. But the advance lost steam Thursday, with the jobs report giving investors a reason to retreat after a strong second quarter.

In the April-through-June period, the S&P 500 gained 15.2%, its best quarter in more than a decade. The Dow rose 11% and the Nasdaq 20%. Both indexes posted their best quarters since the second of 2003. Stocks rallied on hopes that the economy was starting to stabilize after the six months of panic that followed the collapse of Lehman Brothers last September.

But lately, stocks have churned on concerns that the market got ahead of itself.
0:00 /1:36Unemployment's domino effect

Economic news: Normally a market mover, the weekly jobless claims report was overshadowed by the June payrolls report.

The number of Americans filing new claims for unemployment fell to 614,000 last week from a revised 630,000 the previous week, the Labor Department reported. Economists thought claims would fall to 615,000.

May factory orders rose 1.2%, the Commerce Department reported, versus forecasts for a rise of 0.9%. Factory orders rose a revised 0.5% in April.

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