Fears as payrolls data weaker than expected

Dow Jones:12,151.26 (-97.29) S&P 500:1,300.16 (-12.78) Nasdaq:2,732.78 (-40.53 )

WALL STREET closed out a fifth week of losses with more selling yesterday after an anemic jobs report strengthened the case that the economy was slowing, though analysts said indexes may stabilise in the near-term.

Selling was heavy in the morning following the payroll report, and the SP 500 intermittently tested its April low at 1,294.70 until a bullish report on the services sector helped equities recover some losses.

Major indexes are trading at their lowest in six weeks, and the SP is off 4.7 per cent from highs reached in late April. However, fund managers say stocks have priced in macroeconomic uncertainty by now. “We don’t see material downside from here,” said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has $650 billion in assets under management.

“A five per cent correction is appropriate for the slowdown we’re experiencing, and over the intermediate term, our expectation is that we’ll regain some momentum,” he said.

The government’s payrolls report showed 54,000 jobs added in May, the weakest reading since September, while the US unemployment rate rose to 9.1 per cent from 9 per cent in April.

The report followed recent reads on manufacturing, housing and the consumer that all pointed to slowing demand, prompting debate among investors about the duration of the economic softness. The Dow Jones industrial average slid 97.29 points, or 0.79 percent, to end at 12,151.26. The Standard Poor’s 500 Index fell 12.78 points, or 0.97 per cent, to 1,300.16. The Nasdaq Composite Index dropped 40.53 points, or 1.46 per cent, to 2,732.78.

Newell Rubbermaid was the SP 500’s biggest percentage loser, sliding 11.8 per cent to $14.96 after it cut its forecasts for the year and said second-quarter results would miss estimates.

Dow component Wal-Mart announced a $15 billion stock-buyback programme, aiming to hearten shareholders who have seen the stock lag as its US sales remain in a prolonged slump. The stock edged up 0.2 per cent at $53.66. Forest Laboratories rallied 3.7 per cent to $36.90 and was the top gainer in the SP 500 after it announced an accelerated stock-buyback plan. – (Reuters)