A clutch of dire economic reports submerged Wall Street’s week in gloom, with investors fretting joblessness and other maladies will spell an extended period of slow growth.
A Memorial Day holiday on Monday and an upward bounce on Tuesday proved to be rare respite for traders in a week that saw stocks fall precipitously from Wednesday to Friday.
The Dow Jones Industrial Average fell 2.3 percent during the week, finishing at 12,151.26 points. The NASDAQ fell 2.3 percent to 2,732.78 points and the larger S&P 500 was down by the same percentage to 1,300.16 points.
The week was dominated by news from US jobs market, with one indicator after another proving a harbinger of poor official data that came on Friday and which did not fail to disappoint.
The markets had started the week well, shrugging off weak consumer confidence figures as traders focused on an imminent deal between international lenders and Greece that would ease the eurozone’s woes.
In retrospect, news from the conference board that its consumer confidence index slid to 60.8 last month from 66.0 in April should have been a sign of things to come.
The market quickly woke up on Wednesday, with the Dow Jones dropping 279 points (2.2 percent) after payrolls firm ADP said the private sector added only 38,000 jobs last month, well below the 170,000 expected.
Meanwhile, the Institute for Supply Management’s manufacturing survey plummeted nearly 7 percentage points from April to a 19-month low, as new orders alone dropped by almost one-fifth.
The mood was soured further on Thursday, when Moody’s warned that credit ratings of the US and, separately, its banks, could be revised and downgraded.
Ratcheting up the pressure on feuding US politicians, Moody’s told Washington it faces a credit review and potentially crippling downgrade if the national debt limit is not raised within weeks.
Moody’s also said it would review for possible downgrade the ratings of Bank of America, Citigroup and Wells Fargo, in a move tied to their government support during the financial crisis.
Meanwhile, Goldman Sach’s shares tumbled only to pare losses, after it had received a subpoena from the Manhattan District Attorney’s office as part of a probe of the firm’s activities in the run-up to the financial crisis.
The malaise was capped on Friday with the US Department of Labor’s jobs report, which showed the economy added a paltry 54,000 jobs last month, one-quarter of the February-to-April pace, intensifying the challenge to US President Barack Obama’s administration to get the economy growing.
The US jobless rate climbed to 9.1 percent last month.
“Even if the data does not suggest that the economy is going to contract any time soon, it certainly suggests that we have a bit of a slowdown,” Gina Martin of Wells Fargo Securities said.
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