Stocks plunged Friday, with the Dow Jones industrial average erasing its 2012 advance, as American employers added the fewest workers in a year, the unemployment rate rose and manufacturing in the U.S., Europe and China disappointed.
The Dow closed down 274.88 points, or 2.22%, at 12,118.57; the index opened 2012 at 12,221.19. The S&P 500 declined 32.29 points, or 2.46%, to 1,278.04; while the Nasdaq composite closed down 79.86 points, or 2.82%, to 2,747.48. All numbers are preliminary.
Equities tumbled amid further evidence of a global economic slowdown. The Department of Labor on Friday reported that payrolls climbed by 69,000 last month, less than the most-pessimistic forecast, after a revised 77,000 gain in April that was smaller than initially estimated. The jobless rate rose to 8.2%.
The Institute for Supply Management’s factory index fell to 53.5 after reaching a 10-month high.
Earlier Friday, data showed that a gauge of manufacturing in the 17-nation eurozone fell to a three-year low of 45.1 in May, indicating a 10th month of contraction, while unemployment reached 11%, the highest on record. China’s Purchasing Managers’ Index dropped to 50.4 from 53.3, the weakest production growth since December.
“The weak jobs report confirms that the U.S. is vulnerable to a European situation that is going from bad to worse,” said Mohamed El-Erian, CEO ands co-chief investment officer of Pacific Investment Management Co. “The report’s details speak to an unemployment crisis that is getting more stubbornly embedded in the structure of the economy. The employment situation will be challenged by an ongoing global slowing and the threat of the fiscal cliff.”
