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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. From the story: "The city of Indianapolis also will consider tax incentives and funding for infrastructure required for the project, according to IEDC." Why would the City need to consider additional tax incentives when Lowe's has already bought the land and reached an agreement with IEDC to bring the jobs? What that tells me is that the City has already pledged the incentives, unofficially, and they just haven't had time to push it through the MDC yet. Either way, subsidizing $10/hour jobs is going to do nothing toward furthering the Mayor's stated goal of attracting middle and upper-middle class residents to Marion County.

  2. Ron Spencer and the entire staff of Theater on the Square embraced IndyFringe when it came to Mass Ave in 2005. TOTS was not only a venue but Ron and his friends created, presented and appeared in shows which embraced the 'spirit of the fringe'. He's weathered all the storms and kept smiling ... bon voyage and thank you.

  3. Not sure how many sushi restaurants are enough, but there are three that I know of in various parts of downtown proper and all are pretty good.

  4. First off, it's "moron," not "moran." 2nd, YOU don't get to vote on someone else's rights and freedoms that are guaranteed by the US Constitution. That's why this is not a state's rights issue...putting something like this to vote by, well, people like you who are quite clearly intellectually challenged isn't necessary since the 14th amendment has already decided the issue. Which is why Indiana's effort is a wasted one and a waste of money...and will be overturned just like this has in every other state.

  5. Rick, how does granting theright to marry to people choosing to marry same-sex partners harm the lives of those who choose not to? I cannot for the life of me see any harm to people who choose not to marry someone of the same sex. We understand your choice to take the parts of the bible literally in your life. That is fine but why force your religious beliefs on others? I'm hoping the judges do the right thing and declare the ban unconstitutional so all citizens of Wisconsin and Indiana have the same marriage rights and that those who chose someone of the same sex do not have less rights than others.

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