Stocks fall as June job losses exceed estimates
NEW YORK — Stocks fell Thursday morning after a new report showed more job losses than expected in June.
Major stock indexes were down about 2 percent after the U.S. unemployment rate hit a 26-year high. European markets were also down following similarly disappointing data on unemployment in the 16 countries that use the euro currency.
Recession-weary employers in the U.S. cut 467,000 jobs in June, the Labor Department reported, far worse than the 363,000 that economists expected and a grim signal that the path to recovery will be bumpy.
The jobless rate, meanwhile, rose to 9.5 percent last month from 9.4 percent in May. Economists had predicted a rate of 9.6 percent.
In morning trading, the Dow Jones industrial average fell 162.26, or 1.9 percent, to 8,341.80. The Standard & Poor’s 500 index declined 19.61, or 2.1 percent, to 903.72, while the Nasdaq composite index fell 42.71, or 2.3 percent, to 1,803.01.
Overseas markets also fell after a report showed unemployment in Europe rose to a 10-year high in May.
“This is part of the market recovery,” said Roy Williams, CEO of Prestige Wealth Management. “You’re going to get bad news.” Williams predicted the unemployment rate is likely to reach 11 percent.
Williams also noted, however that other recent data has shown the economy is beginning to improve. After the market’s surge from March lows, Williams said data like the jobless figures will give investors pause and sell stocks.
Declining issues outnumbered advancers by about 11 to 1 on the New York Stock Exchange, where volume came to 107 million shares.
Markets kicked off the third quarter on Wednesday with gains after getting some reassuring data on manufacturing and housing. Traders were encouraged by a report showing more stable manufacturing activity and another indicating the fourth straight monthly rise in pending home sales.
Bond prices mostly rose early Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.50 percent from 3.54 percent late Wednesday. The yield on the three-month T-bill rose to 0.17 percent from 0.16 percent late Wednesday.
The dollar mostly rose against other major currencies, while gold prices fell.
The Russell 2000 index of smaller companies fell 14.83, or 2.9 percent, to 502.63.
Overseas, Japan’s Nikkei stock average fell 0.6 percent. In afternoon trading, Britain’s FTSE 100 fell 2.4 percent, Germany’s DAX index declined 3.2 percent, and France’s CAC-40 fell 2.8 percent.
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