Jobs report slams stocks

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Dumbest Moments in Business 2009...midyear edition

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NEW YORK (CNNMoney.com) -- Stocks tumbled Thursday, with the Dow losing 212 points, after a worse-than-expected jobs report hammered hopes that the economy is close to stabilizing.

The Dow Jones industrial average (INDU) fell 212 points, or 2.5%. The S&P 500 (SPX) index lost 27 points, or 2.9% and the Nasdaq (COMP) fell 49 points, or 2.7%.

The New York Stock Exchange extended trading until 4:15 p.m. ET, so as to allow customers to put through orders that were impacted by system irregularities. The NYSE did not specify what the irregularities were.

Stocks tumbled at the open and remained in the red throughout the session as investors considered the broader implications of the dismal June jobs report.

"The report was kind of a rude awakening and unfortunately I think there's more to come," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

"People are realizing that the stock market rally doesn't mean the economy is coming back."

Since bottoming at a 12-year low, the S&P 500 had surged over 40% through June 11. But in the weeks since then, it has lost 5% of that.

Jobs report: Employers cut 467,000 jobs from their payrolls in June, after cutting 322,000 jobs in May, the Labor Department reported Thursday. That made June the first month in four in which job losses rose from the previous month. Economists surveyed by Briefing.com expected 365,000 job losses.

The unemployment rate, generated by a separate survey, rose to 9.5% from 9.4%, short of forecasts for an increase to 9.6%.

"The report was terrible," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc."It's telling us that there is a lot more pain than people realize that we are going to have to get through before there can be a recovery."

On the move: Declines were broad based, with all 30 Dow stocks falling, led by oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). IBM (IBM, Fortune 500), Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Procter & Gamble (PG, Fortune 500), Johnson & Johnson (JNJ, Fortune 500), United Technologies (UTX, Fortune 500) and Wal-Mart (WMT, Fortune 500) were the other big losers.

Economically sensitive trucking and railroad stocks plunged, dragging down the Dow Jones Transportation (DJT) average by 3.7%.

Financial shares tumbled, including Dow components American Express (AXP, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Travelers Companies (TRV, Fortune 500).

Market breadth was negative and volume was light with Wall Street pros checking out early for the holiday. On the New York Stock Exchange, losers topped winners by over four to one on volume of 733 million shares. On the Nasdaq, decliners beat advancers five to one on volume of 1.95 billion shares.

All financial markets are closed Friday for the Independence Day holiday.

Weak start to new quarter: Stocks climbed Wednesday on the first day of the third quarter as investors found some encouragement in the day's housing and manufacturing reports. But the advance lost steam Thursday, with the jobs report giving investors a reason to retreat after a strong second quarter.

In the April-through-June period, the S&P 500 gained 15.2%, its best quarter in more than a decade. The Dow rose 11% and the Nasdaq 20%. Both indexes posted their best quarters since the second of 2003. Stocks rallied on hopes that the economy was starting to stabilize after the six months of panic that followed the collapse of Lehman Brothers last September.

But lately, stocks have churned on concerns that the market got ahead of itself.

Economic news: Normally a market mover, the weekly jobless claims report was overshadowed by the June payrolls report.

The number of Americans filing new claims for unemployment fell to 614,000 last week from a revised 630,000 the previous week, the Labor Department reported. Economists thought claims would fall to 615,000.

May factory orders rose 1.2%, the Commerce Department reported, versus forecasts for a rise of 0.9%. Factory orders rose a revised 0.5% in April.

Company news: In deal news, Exelon (EXC, Fortune 500) has sweetened its hostile takeover offer for rival power generator NRG Energy (NRG, Fortune 500). The all-stock offer is $8 billion versus the previous offer of $7 billion.

Johnson & Johnson (JNJ, Fortune 500) will take an 18% equity stake in biotech Elan (ELN) in exchange for a $1 billion investment. J&J will also buy Elan's share of its Alzheimer's disease treatment program with Wyeth.

U.S.-traded shares of Elan gained 11% in active New York Stock Exchange trading.

Commodities: Energy prices tumbled, with U.S. light crude oil for August delivery falling $2.37 to $66.94 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery fell $10.60 to settle at $930.70 an ounce.

Bonds: Treasury prices rallied, lowering the benchmark 10-year note yield to 3.5% from 3.53%. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian and European markets ended lower.

In currency trading, the dollar gained versus the euro and fell against the yen.