NEW YORK — Sluggish job growth has reinforced investor fears about the struggling U.S. economy, prompting louder calls that the Federal Reserve and Congress renew efforts to boost growth.
Major stock indexes slumped 1 percent Friday after the Labor Department reported its third-straight month of weak hiring. Only 80,000 jobs were created in June, a big drop from the average of 226,000 logged each month during the first quarter.
The continued drumbeat of soft economic reports could increase the chances that the Fed will do something to help stimulate the economy. Policymakers said during the last policy-setting meeting in June that they stood ready to act if needed.
But analysts say it’s hard to tell if the latest economic snapshot will be enough to drive more stimulus. The Fed will now probably focus on the stream of corporate earnings reports that start coming out next week and look for signs about future hiring.
“We’re going to have to start employing people again or the economy is going to slow significantly,” said J.J. Kinahan, chief derivatives strategist for TD Ameritrade. “If people aren’t getting jobs, confidence starts to wane. And when confidence starts to wane, people stop spending.”
Friday’s job report, along with recent lackluster manufacturing and services-sector data, led S&P Capital IQ to conclude that the U.S. faces a 50 percent chance of falling back into recession.
“It’s really hard to sugarcoat these numbers,” said Michael Thompson, head of Global Markets Intelligence at S&P Capital IQ in New York. “The economy looks like it’s relapsing into a more precarious position.”
The Dow Jones industrial average — which at one point Friday was down 193 points — shed 124.2 points, or 1 percent, to 12,772.47. The broader Standard & Poor’s 500 lost 12.9 points, or 0.9 percent, to 1,354.68; and the Nasdaq composite lost 38.79 points, or 1.3 percent, to 2,937.33.
Quincy Krosby, a market strategist for Prudential Financial, said avoiding this fiscal cliff would bring confidence back into the stock market.
“It would help for consumer confidence,” she said. “It would help for investor confidence to have that be dealt with sooner rather than later.”
