US stocks fall on job report news

NEW YORK - The Dow Jones industrial average dropped for a seventh straight day, its longest losing streak since the height of the financial crisis in October 2008. A disappointing jobs report added to investors' concerns that the economic recovery is losing steam.

The Dow ended down 46 points overnight after the government said private employers added only 83,000 jobs last month, fewer than the 112,000 analysts had forecast. The Dow and other major indexes posted big losses for a second straight week.

Light trading ahead of the long Independence Day weekend brought choppy moves, particularly in the final hour. The Dow was essentially flat in the last five minutes before sliding just before the close.

Reports on jobs earlier in the week had diminished expectations for the snapshot of the labour market. Payroll company ADP said private employment was weaker than expected, while the government said initial claims for unemployment benefits rose unexpectedly last week.

Investors are focused on business hiring because that makes up the bulk of the country's work force. Also, overall jobs numbers have been skewed in recent months by the hiring of temporary census workers. Businesses aren't adding to payrolls as quickly as most investors would like.

"The small businessman refuses to play here," said Linda Duessel, equity market strategist at Federated Investors in Pittsburgh. She said business leaders don't yet have the confidence to hire and are instead relying on temporary workers. The enduring jobs problems are raising concerns that the economy will begin sliding again. Many economists say that's unlikely but still a worry.

"We're going to need, as a market, something to make us believe that the double-dip scenario is wrong," Duessel said. "A soft patch is normal." She said earnings reports for the April-June quarter could boost sentiment if companies also give upbeat forecasts.

The government cut 225,000 census jobs in June. Overall, 125,000 workers lost their jobs last month, worse than the expected drop of 110,000.

The unemployment rate did fall unexpectedly, dropping to 9.5 per cent from 9.7 per cent. Economists polled by Thomson Reuters had expected it to rise to 9.8 per cent. However, the decrease came as some people gave up looking for work. That means they weren't counted among the unemployed.

The government also reported that factory orders fell in May for the first time in nine months. The 1.4 per cent drop was the biggest since March 2009, when major stock indexes hit a 12-year low. The drop unnerved traders because manufacturing has been one of the strongest areas of the economy.

Pessimism has been growing since late April about the health of the economy. The Dow dropped 10 per cent for the second quarter, which ended Wednesday, while the Standard & Poor's 500 index lost 11.9 per cent.

"Clearly there is a loss of momentum," said Bob Baur, chief global economist at Principal Global Investors, referring to the recovery. He said the slide in stocks could do as much as anything to hurt the economy by eroding confidence. Still, he said a double-dip is unlikely in part because incomes are ticking higher and consumers are slowly adding to spending. "We just don't see the typical things that start another recession," Baur said.

According to preliminary calculations, the Dow fell 46.05, or 0.5 per cent, to 9,686.48. The Dow hasn't fallen for seven straight days since an eight-day loss that ended Oct. 10, 2008.

The Standard & Poor's 500 index fell 4.79, or 0.5 per cent, to 1,022.58, while the Nasdaq composite index fell 9.57, or 0.5 per cent, to 2,091.79.

For the week, the Dow dropped 4.5 per cent. The S&P 500 index lost 5 per cent, while the Nasdaq dropped 5.9 per cent.

Demand for Treasurys weakened after spiking earlier in the week. The yield on the 10-year note, which moves opposite its price, rose to 2.98 per cent from 2.95 per cent late Thursday. Its yield is used as a benchmark for interest rates on some mortgages and other consumer loans.

Crude oil fell 81 cents to $72.14 per barrel on the New York Mercantile Exchange. Gold rose.

Daniel Penrod, senior industry analyst for the California Credit Union League, said the handoff from government stimulus to private hiring will work eventually but the question is when. Until there is more certainty about the direction of the economy some businesses are going to put off hiring.

"I don't see business really taking huge risks right now to build when they don't think people are going to be walking through the door," Penrod said.

The coming week could bring more insight into the economy if companies begin to drop hints about their earnings and forecasts. US markets are closed Monday in observance of Independence Day. Tuesday brings a report on services businesses, which make up the biggest chunk of the economy.

Rising stocks narrowly outnumbered those that fell on the New York Stock Exchange, where volume came to 1.1 billion shares, compared with 1.6 billion Thursday.

The Russell 2000 index of smaller companies fell 5.79, or 1 per cent, to 598.97.

- AP