US Stocks Plunge After Weak Jobs Report 2010

Wall Street stocks dived Friday after government data showed the US economy created fewer jobs than expected last month, raising questions about the strength of the recovery from recession.

The Dow Jones Industrial Average tumbled 181.07 points (1.77 percent) to 10,074.13 at 1506 GMT.

The tech-rich Nasdaq index dropped 33.54 points (1.46 percent) to 2,269.49 and the S&P 500 index, a broad measure of the market, shed 17.90 points (1.62 percent) to 1,084.93.

The Labor Department’s keenly anticipated May jobs report proved a major disappointment.

The economy created 431,000 nonfarm jobs in May, with the vast majority of the new jobs due to temporary government hiring for this year’s census. Most experts had expected 500,000 payrolls would be added.

More worrying, analysts said, was the private sector accounted for only 41,000 new jobs, less than a fifth of the consensus forecast.

The unemployment rate slipped to 9.7 percent from 9.9 percent in April as the labor force contracted.

“The May numbers are now a sobering reminder of the depth and severity of the labor market decline of the past two years and the lingering obstacles to growth,” said Sophia Koropeckyi at Moody’s Economy.com.

The US jobs report rocked European stock markets, adding to renewed concerns about eurozone public finances after Hungary’s prime minister raised the prospect of a debt default.

“The report has clearly shifted the market’s mood into selling mode,” Briefing.com analysts said in a note to clients.

“The question will be if the report will be digested and discounted due to the effects of the census influence. How we close the day will be a good indicator of which way the general tenor is heading,” they said.

McDonald’s shares dropped 0.84 percent to 67.28. The fast-food titan recalled 12 million drinking glasses sold in the United States to promote the latest “Shrek” movie after they were found to be tainted with cadmium, a toxic metal.

AFP