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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. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

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