Wall Street tumbles after payrolls, China data
NEW YORK, June 1 — Wall Street tumbled today after jobs growth showed an anaemic addition to the workforce, the latest blow in a string of disappointing data that triggered fears of a further slowdown in the global economy.
The Labour Department said employers created a paltry 69,000 jobs last month, the weakest in a year, and the unemployment rate rose to 8.2 per cent. Economists polled by Reuters had expected non-farm payrolls to increase 150,000.
China’s economy showed signs of a broadening slowdown as its official purchasing managers’ index fell to 50.4 in May from April’s 13-month high of 53.3, signalling a deeper-than-forecast deterioration in demand at home and abroad.
“It’s a continuation of the slowdown in the economic numbers we’ve been seeing domestically over the last couple of months,” said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank in the Northeast, in New York.
“I would expect a relatively ugly day in the markets.”
The Dow Jones industrial average dropped 162.46 points, or 1.31 per cent, to 12,230.99. The Standard & Poor’s 500 Index lost 19.87 points, or 1.52 per cent, to 1,290.46. The Nasdaq Composite Index fell 44.70 points, or 1.58 per cent, to 2,782.64.
The benchmark S&P index moved closer to its 200-day moving average, a significant technical level which could trigger more selling if breached.
Data released later in the session was less bleak. Construction spending rose 0.3 per cent in April as private residential construction increased at the fastest pace in six months.
The Institute for Supply Management said its index of national factory activity slipped to 53.5 from 54.8 in April, just missing expectations for 53.9, but the new orders gauge improved to its highest level in over a year.
In Europe, Markit’s Eurozone Manufacturing Purchasing Managers’ Index dropped to 45.1 in May from 45.9 in April.
Banking shares dropped, with JPMorgan Chase & Co down 1.9 per cent to US$32.52 and Banc of America Corp down 3.4 per cent to US$7.10. The KBW bank index declined 2.8 per cent.
Investor concern has been rising about the stability of Spain’s banking system and the euro zone as a whole, at the same time data has shown tepid economic growth.
The worries sent the benchmark S&P 500 index down 6.3 per cent in May and investors fleeing to safe-haven government securities.— Reuters