New York – U.S. stocks sold off Friday, with the major indexes all ending with weekly losses, after a jolting decline in August employment – the first such drop in nearly four years – sparked worries the country could be headed for a recession.
“It’s a major shock to the market,” said Peter Cardillo, chief market strategist at Avalon Partners. “If the job market continues to weaken, fears of a recession will continue to accelerate, calling into question corporate earnings.”
The Dow Jones industrial average lost 249.97 points, or 1.9 percent, closing at 13,113.38, leaving it with a weekly loss of about 1.8 percent.
All but one of the Dow’s 30 components closed in negative territory, with financial stocks among the losers. American Express Co. saw its stock fall nearly 3 percent.
Pharmaceutical giant Johnson & Johnson was the sole Dow stock to trade in positive turf, up just 0.02 percent.
The S&P 500 fell 25 points, or 1.7 percent, at 1,453.55, giving it a weekly decline of 1.4 percent. The Nasdaq Composite dropped 48.62 points, or 1.9 percent, at 2,565.7, a weekly loss of 1.2 percent.
Volume at the New York Stock Exchange topped 1.4 billion shares, with declining stocks ahead of advancers more than 3 to 1. At the Nasdaq, nearly 1.9 billion shares were traded, with decliners beating advancers by a 4-to-1 ratio.
The Labor Department said Friday morning that U.S. nonfarm payrolls fell an estimated 4,000 in August, while the unemployment rate held steady at 4.6 percent as fewer people were deemed to be seeking jobs.
“This employment report is shocking to most Wall Street observers but not to the thousands that have been thrown out of work in the housing and mortgage industries,” Eliot Spar, market strategist at Stifel Nicolaus & Co., wrote in a note.
The cutback in hiring last month “sends a pretty negative message to Wall Street,” said Hugh Johnson, chairman of Illington Advisors.
The next question is whether the report signals a looming recession, he said. “I would say not, but it’ll be a close call.”
The market retained its losses after the Commerce Department reported U.S. wholesalers’ inventories rose 0.2 percent in July – a slower pace than the prior month – as automotive, petroleum and other stockpiles fell.
For many, the August employment report sealed thoughts that the Federal Reserve would cut interest rates by at least 25 basis points when its policy committee meets this month.
“This employment number is really horrible. It means the Fed will cut interest rates on Sept. 18 – the question is 25 or 50 basis points,” said Cardillo.
In overseas stock market action, the Nikkei 225 closed 0.8 percent weaker in Tokyo, and the FTSE 100 also turned lower.
