US traders threw their hats in with the bears on Friday, after poor jobs figures appeared to confirm the economy was slumping again after weeks of mixed data.
After holding firm for most of the week, the market was sunk by news that the economy generated only 115,000 net new jobs last month, much lower than expected and hardly enough to keep up with the natural growth of the labor market.
The number was less than half of the job creation pace of January-February, which had sparked optimism that converted into an 11 percent gain in the S&P 500 in the first quarter.
Combined with numbers showing tens of thousands of people had dropped out of the jobs market altogether, the data suggested that US household incomes were not picking up and that consumption growth could continue to be weak in the coming months.
It came after traders had failed to lock onto any clear direction from the mixed data and corporate earnings in recent weeks.
While economists were more cautious about the data — saying it does not yet confirm a downward trend — traders were not going to wait for any more confirmation.
Stocks, from banks to tech products to energy, all fell sharply; oil prices plunged, and so did a host of other commodities.
For the week, the Dow Jones Industrial Index was down 1.4 percent to 13,038.27; the S&P 500 sank 2.4 percent to 1,369.10, while the NASDAQ lopped off 3.7 percent to 2,956.34.
Analysts said tech stocks had appeared overpriced, and Apple’s 6.3 percent loss for the week appeared to support that view.
However, the downtrend was widely based, driven by worries over the economy and, to a smaller extent, the important elections taking place in Greece and France over the weekend.
Bank of America lost 6.2 percent; Alcoa lost 3.9 percent and Caterpillar 5.8 percent.
“The jobs data was definitely a major disappointment,” Ryan Detrick of Schaeffer’s Investment Research said.
“I’m not sure if we can call this weakness in the jobs data a trend quite yet, but it sure better turn around soon,” he said.
Earlier in the week traders were more non-committal, because of a mixed baggage of economic indicators, such as this week’s ISM purchasing manager surveys for last month.
The one on manufacturing showed a pickup in growth during the month, but two days later, the index on the much larger service sector showed a significant slowdown.
“The market kept flip-flopping because of disagreeing economic data,” Sam Stovall of S&M Capital IQ said.
However, on Thursday a survey of chain stores showed a disappointing read on sales, reinforcing the idea that the economy took a pause last month.
At the same time, quarterly earnings reports that came out this week and last have been a mixed bag: Most have beaten forecasts — some like Apple wildly so — but many also dealt out warnings that the coming months might not be so buoyant.
“Investors are becoming very worried, or very nervous, that the economy and earnings are slowing. And it is occurring at a time when the stock market is somewhat priced overvalued,” Hugh Johnson of Hugh Johnson Advisors said.
“Over 70 percent of companies have beaten expectations, but none of that really matters as much as the next quarters,” he said.
“The earnings have been very good for the first quarter, but bear in mind that investors care about the second quarter, the third and the fourth,” he said.
Analysts were not optimistic for the coming week, with a dearth of data that might shed more light on the economy’s direction.
“Next week, there isn’t a lot of data to dissect,” Stovall said.
“Consumer credit, trade deficit and producer price index, none of those reports are expected to move the market,” he said.