Stocks sank Friday, dropping the Dow Jones industrial average below 10,000, as slower-than-estimated jobs growth spurred concern the economic recovery might not be as robust as forecast.
The Dow Jones industrial average closed down 323.91, or 3.16%, at 9,931.37; the S&P 500 fell 37.92, or 3.44%, ending at 1,064.91; and the Nasdaq composite closed down 83.86, or 3.64%%, at 2,219.17. All numbers are preliminary.
Shares in Caterpillar and General Electric tumbled at least 4.5% after a government report showed employers in the U.S. hired fewer workers in May than forecast and Americans dropped out of the labor force. Chevron and Alcoa dropped more than 3% to lead commodities producers lower as oil fell to near $71 a barrel and industrial metal prices plunged.
The S&P 500 erased a weekly advance after payrolls rose by 431,000 last month on the heels of a 290,000 increase in April, figures from the Labor Department showed. The gain was smaller than the 536,000 median forecast in a Bloomberg News survey and reflected a 411,000 jump in government hiring of temporary help for the 2010 census. Private payrolls rose a less-than-forecast 41,000. The unemployment rate fell to 9.7% as Americans dropped out of the labor force.
Mohamed A. El-Erian, CEO and co-chief investment officer at PIMCO, said stock investors should brace for higher volatility after the jobs report.
“Investors should keep their seat belts on and tight,” Mr. El-Erian wrote in an e-mail to Bloomberg News. “The disappointing jobs report is further evidence that drivers of self-sustaining private consumption growth are facing structural problems that result in slow income growth, reduced credit availability and lower ability to monetize wealth.”