WASHINGTON — After a spate of bad economic news and a 10-day pounding of stock prices, today’s jobs report is likely to play an outsized role in either calming the waters or deepening fears that the U.S. economy is sliding back toward recession.
Stocks plummeted Thursday as investors fretted about weakening economic conditions and emergency steps announced by the European Central Bank that only heightened worries that big economies, led by Italy and Spain, are in deep trouble.
The Dow was down more than 300 points much of the day, and it plunged at the end to finish the day down 512.76 to close at 11,383.68. The S&P 500 fared no better, off 60.27 points to close at 1,200.07. The tech-heavy Nasdaq fell 136.68 points to end at 2,556.39. Thursday’s plunge followed a breather Wednesday that broke an eight-day slide, the worst since October 2008, when the U.S. financial system was in meltdown.
Stocks led a broad selloff across financial markets that offered investors no place to hide. Gold and silver prices fell, as did crude oil and other commodities. Investors sought safety in U.S. bonds, with the yield, or interest rate, falling on 10-year bonds. The yield on one-month Treasury bills briefly went negative. That meant investors were willing to lose money by holding these bills, betting that it would represent a smaller loss than holding other financial assets. Yields on two-year Treasuries also hit a record low.
The financial-market volatility heightens attention to today’s Labor Department monthly report on jobs, which has been dismal for two consecutive months. Perhaps surprisingly in light of the recent run of bad economic news, there are reasons to think the July jobs report may reverse the skid, with most forecasters projecting growth in the range of 90,000 to 120,000 new jobs.
Wednesday’s ADP National Employment Report, which gauges private payrolls, estimated that 114,000 private-sector jobs were created in July.
Another positive sign for jobs came Thursday, when the government reported that during the week that ended July 30, first-time claims for unemployment benefits were little changed at 400,000. That was lower than had been forecast, and the four-week average for these claims is at the lowest point since mid-April.
