US: Stocks tumble as weak jobs report adds to doubts on economy
[NEW YORK] Wall Street stocks finished sharply lower Friday (Aug 1) following a weak July jobs report that raised concerns about US economic health.
Major US indices fell 1.2 per cent or more after the Department of Labor reported lower than expected jobs data for July and announced downward revisions to the prior two months.
“Investors are getting a bit worried that this economy is softening more rapidly than we earlier thought,” said Sam Stovall of CFRA Research.
The Dow Jones Industrial Average finished down 1.2 per cent at 43,588.58.
The broad-based S&P 500 fell 1.6 per cent to 6,238.01, while the tech-rich Nasdaq Composite Index dropped 2.2 per cent to 20,650.13.
The Labor Department said that the US economy added just 73,000 jobs in July, while the unemployment rate rose to 4.2 per cent from 4.1 per cent. The department also cut the job gains from June and May by nearly 260,000 jobs.
The report comes at a moment when investors had been questioning whether the market was overvalued following a series of records in recent weeks.
“There’s a lot of excuses to do some selling. The primary one today is the payrolls data,” said Briefing.com analyst Patrick O’Hare.
Following the jobs data, yields on US Treasury bonds fell sharply as markets price in a weaker US growth outlook and expected cuts in Federal Reserve interest rates.
“The market thinks the Fed needs to cut rates and will cut rates in September because of the data,” O’Hare said.
O’Hare also pointed to the “disappointing price action” in the market following generally strong earnings from large tech companies.
On Friday, Apple fell 2.4 per cent despite reporting much better than expected results. AFP
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