S&P 500 Drops 3.4% On Disappointing Job Report

U.S. stocks fell at the opening bell, as investors were disappointed with the government’s May report that showed fewer-than expected jobs were created and job creation mostly came from hiring for the U.S. census.

The Dow Jones industrial average fell more than 1.5 percent at the opening, ending down 3,2% at 9.931 points. The New York Stock Exchange activated Friday the so-called rule 48 due to expectations of extreme volatility.

The S&P 500 Index declined 3.4 percent to 1,064.88 points, Friday. It is the biggest drop on the day of the U.S. Labor Department’s monthly jobs report since at least 1998, according to data compiled by Bespoke Investment Group LLC. The Dow Jones Industrial Average sank 324.06 points, or 3.2 percent, to 9,931.22. All 30 of its components retreated.

Investors got an unpleasant surprise from the Labor Department‘s report that 431,000 jobs were created last month. Most of those jobs, 411,000, came from the government’s hiring of temporary census workers. Economists polled by Thomson Reuters had forecast employers would add 513,000 jobs.

Hiring by private employers was particularly weak, which is raising concerns that the economic recovery remains slow. Private employers added just 41,000 jobs in May, down from 218,000 in April and the fewest since January.

The unemployment rate fell to 9.7 percent from 9.9 percent in April. That was slightly better than the 9.8 percent unemployment rate economists had forecast. That number, however, could creep higher again as more people try to find work and census workers lose their temporary jobs.

Overall, 15 million American remain unemployed. Including workers who have given up looking for work or part-time workers who want full-time jobs, the so-called underemployment rate dipped to 16.6 percent in May from 17.1 percent a month earlier.

The monthly jobs report is one of the most important reports on the economic calendar. High unemployment remains one of the biggest obstacles to strong, sustained growth. Without people returning to the work force, consumer spending is expected to remain sluggish and limit future growth. Consumer spending accounts for the bulk of economic activity.

You’ll find the full report here.

NYSE Activate Rule 48

At the New York Stock Exchange the regulators have now invoked the so-called rule nr.48, that is a precaution rule activated when market volatility is expected to be extremely high.

“Rule 48 suspends the requirement for market makers to send pre-opening indications, or bid and ask prices developing in auctions used to determine a stock’s opening price. The regulation is used “only in those situations where the potential for extremely high market-wide volatility would likely impair floor-wide operations at the exchange,” NYSE Euronext says in an e-mail.

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