A worse-than-expected unemployment report ignited another dizzying sell-off Friday, sending the Dow Jones industrials tumbling more than 230 points and the Standard & Poor's 500 index to its lowest level in nearly three years.
Analysts blamed the losses on Wall Street's growing fears that the economy is worsening and more bad news, rather than a turnaround, is ahead.
"The unemployment rate was higher than we anticipated and people are concerned that the economic slowdown isn't showing signs of recovery," said Robert Harrington, head of listed block trading at UBS Warburg.
The Dow closed down 234.99, or 2.4 percent, at 9,605.85. That was its lowest close since April 4, but still 216 points above its weakest finish for the year.
The Standard & Poor's 500 index fell 15.75, or 1.9 percent, to 1,090.65, its weakest finish this year and lowest close since October 1998.
The NASDAQ composite index fell the least of the three major benchmarks but still recorded its worst close since April 4, down 17.94, or 1.1 percent, at 1,687.70, about 49 points from its 2001 low point.
For the week, the Dow lost nearly 3.5 percent, the NASDAQ fell 6.5 percent and the S&P fell 4.2 percent.
The selling began early in the session on a Labor Department report showing the nation's unemployment rate soared to 4.9 percent in August -- its highest level in nearly four years -- and businesses slashed 113,000 jobs as the slumping economy continued to hammer the labor market.
Investors punished retailers Friday out of fear the slowdown would hurt consumer spending and confidence. Consumer spending accounts for two-thirds of the economy, and Wall Street is terrified that any decrease could put already fragile businesses in even worse positions than they are now.
Home Depot dropped US$2.60, or 6 percent, to US$40.95, while Wal-Mart lost US$1.15 to US$46.22.
"People are getting increasingly concerned that the consumer, who has held the economy up so far, will begin to retrench and the economy will lose what little momentum it has and this will turn into a recession," said Bob Barker, investment consultant at Dain Rauscher.
So far the US economy has managed to steer clear of a recession, commonly defined as two consecutive quarters of negative growth, though the nation's second quarter growth numbers were only 0.2 percent -- its slowest pace in eight years.
The pessimism extended to manufacturing and financial stocks. American Express slid US$0.88 to US$34.40 on fears a consumer and business slowdown would hurt the broader sector.
And Boeing tumbled US$3.54 or 8 percent to US$45.30 after a Morgan Stanley analyst downgraded the airplane manufacturer citing slowing orders.
Even pharmaceutical issues, usually a favorite with Wall Street in uncertain times, were weak. Merck lost US$1.23 to US$64.52.
Tech stocks also suffered, despite some positive news concerning two bellwethers. Intel fell US$0.21 to US$25.89, despite its reiteration late Thursday that its revenues would be in line with expectations.
And investors sold off Microsoft, sending it down US$0.62 to US$55.40, even though the Justice Department had indicated Thursday it would not seek to breakup the company because of anticompetitive behavior and would not interfere with the company's release of its Windows XP operating system next month.
Wall Street had been hoping for rally when investors returned from summer holidays this week, but got just the opposite.
Analysts have said investors are hesitant to make any big commitments until corporate and economic news improve.
The market was weak throughout the summer with losses that accelerated in August on a mix of bad economic indicators, disappointing earnings and gloomy forecasts from companies. So far, the news hasn't gotten any better.
This week alone, Motorola reduced third-quarter profit forecasts and announced 2,000 more job cuts for a yearly total of 32,000. Manufacturing data was not as weak as expected, but retail reports were mixed.
Declining issues led advancers nearly 3-to-1 on the New York Stock Exchange in moderate trading. Volume was 1.16 billion shares, compared with 1.04 billion at the same point Thursday.
The Russell 2000 index of smaller companies fell 7.75 to 445.64.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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