NEW YORK: US stock indexes closed at their lowest levels of the year on Friday after a dismal July jobs report fuelled concerns the US economic recovery could be losing steam and crude oil hit another 21-year high.
The broad Standard & Poors 500 index had its worst week of the year, falling 3.4%.
Oil prices, which have climbed all summer and hit record highs in six straight sessions this week, helped push stocks lower. NYMEX crude futures eased back to around US$44 per barrel after reaching a high of US$44.77.
The blue-chip Dow was slammed for a second straight day, sending it well below the psychologically sensitive10,000-level.
United Technologies Corp, 3M Co and Honeywell International Ltd, manufacturers whose businesses are closely linked to swings in the economy, pulled the Dow lower.
Dow component General Electric Co was the biggest weight on the broader Standard & Poors 500 index.
Earlier, the jobs report said employers added only 32,000 workers to payrolls in July, a surprisingly weak number as Wall Street economists had looked for a payroll gain of 228,000.
It marked the second month in a row that the jobs figure fell well below expectations.
The jobs report and oil prices acted as a one-two punch to markets trying to gain solid footing going into a slow August.
The market has been falling for the past month and a half because of concern about a variety of risks: terrorism, oil, interest rates and the Fed and prospects that the (economic) slowdown in June may or may not have carried over into July, said Peter Boockvar, equity strategist at Miller Tabak & Co.
The payroll number just sent us over the edge.
According to the latest data, the Dow Jones industrial average fell 147.7 points, or 1.48%, to 9,815.33, its lowest close since Nov 28.
The Standard & Poors 500 Index closed down 16.73 points, or 1.55%, at 1,063.97, its lowest close since Dec. 10.
The technology-laced Nasdaq Composite Index lost 44.74 points, or 2.46%, to 1,776.89, its lowest close since Aug 26, 2003.
The Dow fell 3.2% for the week, its worst drop since the beginning of March.
The Nasdaq ended the week down 5.9%, its worst week since the beginning of May.
Economists said they still expect the Federal Reserve to raise rates on Tuesday, but the jobs data could cause the Fed to be less aggressive in rate hikes later this year.
Oil prices climbed close to US$45 after a renewed threat to Russian oil major YUKOS added to the strain on world supplies.
US light crude struck US$44.77 a barrel, the highest level in the 21-year history of crude futures on the New York Mercantile Exchange, before easing back to settle at US$43.95, down 46 cents from Thursdays settlement.
Oil is spiking now mostly for technical reasons, said Edgar Peters, chief investment officer at PanAgora Asset Management.
There isnt any real demand or economic reason for it to do so. Theres a little oil bubble here.
The weak jobs report hit employment services stocks, with Internet jobs search company Monster Worldwide Inc falling US$2.18, or 10.8%, to $17.93, while shares of Manpower Inc, the worlds second-largest staffing company, dropped US$2.27, or 5.4%, to US$39.73.
Shares of chip designer Nvidia Corp plunged 35% after it posted a sharply lower quarterly profit on Thursday, as sales of its graphics microprocessors declined. It fell US$5.13 to US$9.43 on Nasdaq.
Intel Corp, the worlds dominant chip maker, pulled on both the Dow and the Nasdaq.
Intels stock was down 90 cents, or 3.8%, to US$22.77.
United Technologies fell US$1.43, or 1.6%, to US$90.05. Honeywell shares slid US$1.19, or 3.3% to US$34.58, while 3Ms stock lost US$1.70, or 2.1%, to US$79.87.
GE dropped 70 cents, or 2.2%, to US$31.52.
Halliburton Co, also fell. According to a new filing in a shareholder class-action lawsuit against the company, several top executives intentionally engaged in serial accounting fraud from 1998 to 2001, including when it was led by US Vice President Dick Cheney.
Its shares fell 44 cents, or 1.5%, to US$29.67. Reuters