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Stocks retreat after disappointing jobs report

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Stocks and interest rates dropped Friday morning after a disappointing employment report renewed concerns about a slowdown in economic growth.

The Dow Jones industrial average fell 33 points in morning trading. Broader indexes also fell.

The Labor Department said 131,000 jobs were cut last month, though that was primarily tied to layoffs of temporary census workers. The unemployment rate remained unchanged at 9.5 percent. Economists polled by Thomson Reuters had forecast 65,000 jobs would be cut last month and the unemployment rate would rise to 9.6 percent.

Because of the cuts to census workers, investors were largely focused on private sector jobs, which account for most jobs in the country. Private employers added just 71,000 jobs, well short of the 90,000 expected by economists.

The Labor Department also sharply revised lower the number of jobs private employers added in June. The department now says just 31,000 private sector jobs were added in June, compared with a previous estimate of 83,000.

Persistently high unemployment is the most significant drag on the U.S. economy, and has been a key focus for investors. Even people who are employed have been slowing down their spending, which hurts the economy even more. Economists say that about 200,000 new private sector jobs would need to be added each month to drive the unemployment rate lower.

Retailers were hurt following the report as investors expected shoppers to continue to hold on to their money. J.C. Penney Co., Macy's Inc. and BJs Wholesale Club were among those that fell.

Economic data over the past three months has indicated a slowdown in growth, and investors are unsure just how much more the recovery will weaken. The disappointing jobs data magnifies worries that slowing growth could end up leading the country back into recession during the second half of the year.

The latest weak sign on the labor market brings heightened attention to the Federal Reserve's meeting next week. The Fed let several economic stimulus programs expire earlier this year such as purchasing mortgage-backed securities, and investors are now wondering whether the central bank will consider new steps to encourage lending again.

In early morning trading, the Dow Jones industrial average fell 32.77, or 0.3 percent, to 10,642.29. The Standard & Poor's 500 index fell 4.09, or 0.4 percent, at 1,121.72, while the Nasdaq composite index fell 8.86, or 0.4 percent, to 2,284.20.

Investors bid up Treasury prices after the employment report came out, driving interest rates lower in the bond market. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.86 percent from 2.91 percent late Thursday. Its yield, which helps set interest rates on mortgages and other consumer loans, is hovering near levels not seen since April 2009.

There were a couple of more upbeat figures deeper in the report that could indicate hiring might eventually pick up. Average hourly earnings rose 0.2 percent last month after falling 0.1 percent in June. Earnings were expected to rise 0.1 percent.

Also, the average work week rose to 34.2 hours from 34.1 hours in June. Economists had predicted average hours would remain unchanged.

The work week details are considered important because it shows how much work employers are squeezing out of current staff. If it climbs too high, productivity of current workers gets exhausted and employers must then turn to hiring new employees to handle the extra work.
 

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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