Market Pulse
U.S. stocks fall 2%-plus, adding to week's gloom
SAN FRANCISCO (MarketWatch) -- U.S. stocks started the new month with more than 2% losses Friday, turning the Dow Industrials negative for the year and pushing the S&P 500 into correction territory, after a U.S. jobs report showed slim growth in May.
The report, following downbeat data from China and Europe, raised serious concerns about the health of the global economy and sent investors running into Treasurys and gold.
The Dow Jones Industrial Average (DJIA) fell 274.88 points, or 2.2%, to 12,118.57, its worst day since Nov. 9. The index is down 2.7% for the week and 0.8% for the year.
The S&P 500 Index (SPX) dropped 32.29 points, or 2.5%, to 1,278.04, undercutting what some analysts see as support at 1,280, and also its worst day in more than six months.
The index is 10% off a intraday, 52-week high and 9.9% off its 52-week closing high, both reached on April 2.
A 10% pullback, which is often termed a technical correction, "doesn't mean we're in a bear market. But it does mean you have to recalibrate for a world where the U.S. is going to barely grow 2%, Europe is a chronic source of stress, and emerging markets, at least for now, are not contributing much," said Russ Koesterich, global chief investment strategist at BlackRock iShares.
The Nasdaq Composite Index (COMP) declined 79.86 points, or 2.8%, to 2,747.48, also in a correction.
The S&P 500 culled its year-to-date gains to 1.6%, after losing 3% this week, while the Nasdaq is 5.5% higher for the year so far, despite losing 3.2% for the week, largely due to strong gains in the first quarter.
Safety play
Gold futures rallied as investors sought a safe haven and the dollar fell on speculation that the weak data could trigger more quantitative easing from the Federal Reserve.
The August gold contract (GCQ2) surged $57.90, or 3.7%, to $1,622.10 an ounce, its best day since August. Read more in Metals Stocks.
Yields on 10-year Treasury notes (10_YEAR) hit a fresh low of 1.44% and recently traded down 10 basis points at 1.46%. Read more on bonds.
"People are fearing the modest growth we were expecting for the U.S. may fade," said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis.
"In addition to the European sovereign-debt scenario, which I think won't go away anytime soon, and fears China is slowing down, over the last couple months we've had some deterioration in U.S. data," he added.
The losses for stocks came after the Labor Department reported Friday that the U.S. economy added only 69,000 jobs in May, while economists polled by MarketWatch expected an increase of 165,000. The unemployment rate edged up to 8.2% from 8.1% as more people entered the workforce. Read more on the latest jobs report.
Stocks were set up for a tough day after global manufacturing data.
Rival surveys of Chinese manufacturing activity showed tepid growth or contraction last month. Read more on Chinese manufacturing.
Euro-zone manufacturing activity shrank at the fastest pace in three years in May, to 45.1%, according to a Markit purchasing managers index. Read more on euro-zone PMI.
In the U.S., the Institute for Supply Management said its manufacturing index fell to 53.5% in May. Economists polled by MarketWatch had forecast a slide to 54%. Readings above 50 indicate the sector is still expanding. Read more on ISM.
Stocks on Thursday ended with losses of 6% or more for the month of May, hammered by concerns that Greece might exit the euro zone, Spain would need an international bailout and Chinese growth was cooling. It was the worst month since May 2010 for the Dow and the Nasdaq. Read more on May stocks.
The year "2012 is beginning to look horribly like 2011 -- initial high hopes that the recovery was kicking into high gear, subsequently dashed," wrote Nigel Gault, chief U.S. economist at IHS Global Insight, in an emailed report. "We expect the Fed will probably try to keep pumping in stimulus in some form in the second half of the year," he said.Read more reaction to the jobs data.
Friday movers
All 30 Dow components were lower Friday, led by a 6.3% loss in
On the S&P 500,
On the upside,
Nasdaq component
For every stock rising on the New York Stock Exchange, roughly six fell. NYSE composite volume was 4.7 billion, while the volume of Nasdaq-listed shares was nearly 2 billion.
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