Stocks on Wall Street fell on Friday june 3 2011 after the monthly government jobs report : Stocks on Wall Street fell on Friday after the monthly government jobs report showed that hiring in the United States slowed in May.
The report from the Labor Department, which showed the economy added just 54,000 jobs in May, was not a surprise as much as another disappointment. Investors had been digesting weak signals about the economy in recent days, with gloomy reports on jobs, manufacturing and auto sales that helped to send stocks down by more than 2 percent this week to their biggest declines in percentage terms since last August.
Also this week, yields on 10-year Treasury notes fell below 3 percent for the first time in 2011 as investors prepared for the economy to slow.
Shortly after the market opened on Friday, the Dow Jones industrial average was down 104.14 points, or 0.9 percent. The Standard & Poor’s 500-stock index was down 11.74 points, or 0.9 percent. The Nasdaq composite index fell 22.56 points, or 0.8 percent. The benchmark 10-year Treasury yield was down to 2.96 percent from 3.03 percent.
“The body of evidence suggested we were going to get a very weak number this morning, and that’s what we got,” said David Kelly, the chief market strategist for J.P. Morgan Funds.
“It would not be surprising if they reacted badly today,” Mr. Kelly said, referring to the financial markets. “For the last few weeks we have had this drip, drip, drip of bad economic numbers.”
The Labor Department report also showed that the unemployment rate rose to 9.1 percent from 9 percent in April. Nonfarm payrolls had climbed by 232,000 jobs in April. May’s number was well below the 165,000 forecast by analysts in a Bloomberg survey.
“A lot of individual investors are skittish and they will sell first and ask questions later,” Mr. Kelly added. “But for the long-term investors it is better to ask the questions first.”
Mr. Kelly said he estimated economic growth to pick up, averaging above 3 percent in quarterly growth rates in the second half of the year compared with the 2 percent he forecast for the second quarter. He said a scenario for a pick-up in growth was more likely than the country sinking into another recession because of factors including a weak dollar, easy monetary conditions and pent-up demand. Corporate profits are also poised to grow.
“For long-term investors that is still the way I would play this,” he added. “But in the short run this is going to raise a lot of fears about something worse.”
“Because of that, stocks are better value than bonds,” Mr. Kelly said.
Steven Ricchiuto, the chief economist for Mizuho Securities USA, said in a research note that the jobs report was weak enough to mean that the 10-year note would trade down toward 2.75 percent.
West Texas Intermediate crude prices for July fell below $100 before the market opened, to $98.60, down by $1.80.
The report from the Labor Department, which showed the economy added just 54,000 jobs in May, was not a surprise as much as another disappointment. Investors had been digesting weak signals about the economy in recent days, with gloomy reports on jobs, manufacturing and auto sales that helped to send stocks down by more than 2 percent this week to their biggest declines in percentage terms since last August.
Also this week, yields on 10-year Treasury notes fell below 3 percent for the first time in 2011 as investors prepared for the economy to slow.
Shortly after the market opened on Friday, the Dow Jones industrial average was down 104.14 points, or 0.9 percent. The Standard & Poor’s 500-stock index was down 11.74 points, or 0.9 percent. The Nasdaq composite index fell 22.56 points, or 0.8 percent. The benchmark 10-year Treasury yield was down to 2.96 percent from 3.03 percent.
“The body of evidence suggested we were going to get a very weak number this morning, and that’s what we got,” said David Kelly, the chief market strategist for J.P. Morgan Funds.
“It would not be surprising if they reacted badly today,” Mr. Kelly said, referring to the financial markets. “For the last few weeks we have had this drip, drip, drip of bad economic numbers.”
The Labor Department report also showed that the unemployment rate rose to 9.1 percent from 9 percent in April. Nonfarm payrolls had climbed by 232,000 jobs in April. May’s number was well below the 165,000 forecast by analysts in a Bloomberg survey.
“A lot of individual investors are skittish and they will sell first and ask questions later,” Mr. Kelly added. “But for the long-term investors it is better to ask the questions first.”
Mr. Kelly said he estimated economic growth to pick up, averaging above 3 percent in quarterly growth rates in the second half of the year compared with the 2 percent he forecast for the second quarter. He said a scenario for a pick-up in growth was more likely than the country sinking into another recession because of factors including a weak dollar, easy monetary conditions and pent-up demand. Corporate profits are also poised to grow.
“For long-term investors that is still the way I would play this,” he added. “But in the short run this is going to raise a lot of fears about something worse.”
“Because of that, stocks are better value than bonds,” Mr. Kelly said.
Steven Ricchiuto, the chief economist for Mizuho Securities USA, said in a research note that the jobs report was weak enough to mean that the 10-year note would trade down toward 2.75 percent.
West Texas Intermediate crude prices for July fell below $100 before the market opened, to $98.60, down by $1.80.
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