A terrible, no-good, awful jobs report set off an ugly sell-off in U.S. stocks today after the government said the economy added no jobs at all in August. The national unemployment rate was unchanged at 9.1%.
The major averages fell more than 2.2% each, and the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) ended slightly lower on the week.
The Dow closed down 253 points, or 2.2% to 11,240. The S&P 500 was off 30 points, or 2.5% to 1,174. The Nasdaq Composite Index ($COMPX) tumbled 66 points, or 2.6%, to 2,480.
Market Outlook: First off, we would note that the US Labor Day holiday follows on Monday, so we would expect market action to subside following the London/European close, meaning lower liquidity/higher volatility may be evident after noon EDT. With that in mind, we would also note US monthly jobs reports are known for heightened short-term volatility immediately following their release and we expect tomorrow’s to be no exception.
Complicating matters this time around are heightened expectations that the Fed may introduce additional easing measures at its Sept. 20-21 meeting. That decision will depend on the state of incoming data before then, and we think this gives greater weight to Friday’s jobs data than normal.
The payroll number was well below the consensus of a gain of 60,000 to 65,000 jobs. It was the first time in 11 months that the economy didn't produce at least some job gains. The report increases the stakes for President Obama, due to offer a jobs plan in a speech to Congress next week. It also suggests the Federal Reserve will make some moves at its September meeting to try to nurse the economy along.
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