IBJNews

Stocks go on roller coaster ride after jobs report

Back to TopCommentsE-mailPrintBookmark and Share

Don't look away for too long. You might miss a market rally. Or a plunge.

The national jobs report caused the Dow Jones industrial average to climb as many as 171 points at the start of trading. Less than 10 minutes after that peak, all the gains had disappeared. Between 10 a.m. and 10:30 a.m., the Dow dipped, rallied, fell, then rose again, only to wind up little changed at the end of the half-hour.

The swings continued all day. The index spent much of the morning and early afternoon down, falling by as many as 243 points. By 1 p.m., it had bounced back and was up 135 points. In late afternoon trading it was up 22 points.

By the market's close, the Dow was up 60 points, or 0.54 percent, to 11,444. The NASDAQ composite index, however, fell almost 1 percent and the Standard & Poor's 500 remained almost flat, slipping less than a point.



Fears that Europe's growing debt crisis might reach U.S. banks and threaten the fragile economy overshadowed a decent jobs report Friday, a day after the Dow's worst decline since 2008.

Among the other issues investors are most concerned about: anemic growth in manufacturing and the service sector and a decline in consumer spending; hiring levels that aren't high enough to significantly lower the unemployment rate; and the belief that the government is unlikely to stimulate the economy through spending.

European leaders have called emergency meetings to craft a plan that would prevent Italy or Spain from becoming the latest country in the region to require large-scale financial help to avoid a debt default.

The two countries have Europe's third and fourth largest economies. European leaders and central bankers might not have the cash needed to prop them up until a larger financial rescue fund can be established by a broader group of financial leaders.

"The market got jittery over how the leaders (in the U.S.) reacted to the debt crisis, to how the leaders (in Europe) reacted to the debt crisis," said Randy Warren, chief investment officer at the investment company Warren Financial Service. "The fear was that they had no plan to deal with the situation."

Such volatility often follows historic sell-offs like the one that happened Thursday, analysts said. Traders who sold on Thursday are searching for bargain-priced stocks. Those who waited to sell because prices were too low are pocketing profits.

As long as traders disagree about the values of most investments, the market will continue to see-saw, says Daniel Alpert, managing partner at Westwood Capital, a New York investment bank.

"There's a sense that we'll see more of the same next week," Alpert said.

That's partly because of the shifting signals about whether the European and U.S. government leaders can accelerate a global economic recovery. That uncertainty contributed significantly to the up and down trading on Friday, said Ron Florance, an investment strategist at Wells Fargo Private Bank. Some investors bought stocks after steep price declines, he said. That helped reverse the day's early losses. Others have rushed to sell their holdings before the weekend, he said.

Florance said he expected stocks to remain volatile for the next several weeks until it's clear how healthy -- or unhealthy -- the economy is.

One positive sign: The U.S. economy added 117,000 jobs in July, and hiring in May and June were not as bad as reported previously, the Labor Department reported. The unemployment rate inched down to 9.1 percent from 9.2 percent, partly because some unemployed workers stopped looking for work. Health care providers and manufacturers added jobs.

But the broader fears about the economy are outweighing the improved jobs report and strong corporate earnings, said Dan Greenhaus, chief global strategist at the trading firm BTIG.

"From an economic standpoint, 117,000 jobs is hardly sufficient to boost the economy," he said. He said it is impossible to tell how long the nervousness will affect the market, but he said it will more likely be years than months.

About twice as many jobs as that must be created every month in order to rapidly reduce the unemployment rate. It has been above 9 percent nearly every month since the recession officially ended in June 2009. Many economists fear that the economy might dip back into recession.

The Dow Jones industrial average plunged 513 points on Thursday. It was the worst day for the Dow since 2008.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Liberals do not understand that marriage is not about a law or a right ... it is a rite of religous faith. Liberals want "legal" recognition of their homosexual relationship ... which is OK by me ... but it will never be classified as a marriage because marriage is a relationship between a man and a woman. You can gain / obtain legal recognition / status ... but most people will not acknowledge that 2 people of the same sex are married. It's not really possible as long as marriage is defined as one man and one woman.

  2. That second phrase, "...nor make or enforce any law which shall abridge the privileges or immunitites of citizens..." is the one. If you can't understand that you lack a fundamental understanding of the Constitution and I can't help you. You're blind with prejudice.

  3. Why do you conservatives always go to the marrying father/daughter, man/animal thing? And why should I keep my sexuality to myself? I see straights kissy facing in public all the time.

  4. I just read the XIV Amendment ... I read where no State shall deprive any person of life, liberty, or property ... nor make or enforce any law which shall abridge the privileges or immunitites of citizens ... I didn't see anything in it regarding the re-definition of marriage.

  5. I worked for Community Health Network and the reason that senior leadership left is because they were not in agreement with the way the hospital was being ran, how employees were being treated, and most of all how the focus on patient care was nothing more than a poster to stand behind. Hiring these analyst to come out and tell people who have done the job for years that it is all being done wrong now...hint, hint, get rid of employees by calling it "restructuring" is a cheap and easy way out of taking ownership. Indiana is an "at-will" state, so there doesn't have to be a "reason" for dismissal of employment. I have seen former employees that went through this process lose their homes, cars, faith...it is very disturbing. The patient's as well have seen less than disireable care. It all comes full circle.

ADVERTISEMENT