US stocks slump on gloomy jobs data

NEW YORK: US stocks dropped sharply as markets opened on Friday, wiping out the previous day's gains after disappointing data on unemployment dashed hopes that the economic recovery might be regaining speed.

The Dow Jones Industrial Average fell 109.21 points (0.86 percent) to 12,610.28 in the first 20 minutes of trading.

The broader S&P 500 shed 13.26 points (0.98 percent) to 1,339.96, while the tech-heavy Nasdaq Composite tumbled 27.49 points (0.96 percent) to 2,845.17.

The sell-off came after the Labor Department reported that the US economy created a paltry 18,000 jobs in June, pushing the unemployment rate up to 9.2 percent and signalling that US growth stayed very weak during the entire second quarter.

The report was a letdown for investors who had hoped the US economy was getting back on track after being bruised by disruptions from the Japan earthquake and a surge in commodities prices earlier this year.

"Today is going to be a rough day for markets," said Jason Schenker, head of Prestige Economics.

"Light summer trading volumes, coupled with a very disappointing report and misplaced expectations, are likely to yield a lot of red on the screen today," he said.

Caterpillar, a maker of mining and construction equipment whose shares are seen as an economic bellwether, had dropped 1.5 percent as of 1400 GMT, while General Electric was down 1.7 percent.

Financial stocks also took a beating, with JPMorgan Chase down 1.5 percent and Bank of America down 1.7 percent.

Bond prices rose sharply as nervous investors flocked to US government debt, traditionally seen as a safe-haven investment.

The yield on the 10-year US Treasury note dropped to 3.04 percent from 3.15 percent late Thursday, while that on the 30-year bond fell to 4.32 percent from 4.37 percent.

Bond prices and yields move in opposite directions.

Copyright AFP (Agence France-Presse), 2011