Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

July 7, 2012

U.S. stocks plunge on weak June jobs report

The reluctance of U.S. employers to hire shows a struggling economy.

The Associated Press

NEW YORK - Investors abandoned stocks Friday after the U.S. government reported that only 80,000 jobs were created in June, the third straight month of weak hiring.

The Dow Jones industrial average fell 124.20 points to close at 12,772.47. The loss wiped out the Dow's gain for the week.

The reluctance of U.S. employers to add jobs shows that the economy is still struggling three years after the recession officially ended. An average of just 75,000 jobs were created every month in the April-June quarter, far below the 226,000 created every month in the first three months of the year.

"It shows the U.S. economy is losing momentum," said Sharon Stark, chief market strategist at the brokerage firm Sterne Agee. "It's a sign of everyone waiting to see what's next."

Of the 30 stocks in the Dow average, only five rose, including McDonald's and AT&T. The world's largest producer of aluminum, Alcoa, and Caterpillar, the construction equipment maker, were among the hardest-hit Dow stocks with declines of about 3 percent each. Materials and industrial companies are the most likely to suffer if the economy weakens.

The anemic jobs report led investors to shift money into low-risk assets. The price of the 10-year Treasury note rose, sending its yield down to 1.55 percent from 1.60 percent late Thursday. The dollar rose against the euro.

The sluggish growth in American jobs comes at a time when the global economy is also losing pace. Central banks in Europe and China took action Thursday to prop up their sliding economies. The new signs of economic sluggishness around the world sent commodities prices lower.

 

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