New York: US stocks sank on Friday after a disappointing May jobs figure, while investors were spooked by the possibility of another debt crisis, this time in Hungary.
Data showed the US economy added fewer-than-expected jobs last month, with a large portion of those being temporary hirings for the US Census.
“There’s no other way to describe it except flat out disappointing,” said Mike O’Rourke, chief market strategist at BTIG LLC in New York. “Once you get beyond the Census numbers, it was abysmal.”
The drop of more than 2% in stocks follows Wall Street’s first back-to-back advances since late April. Worries that Europe’s sovereign debt troubles could spread flared again after a Hungarian official said the country was at risk of a Greek-style crisis, driving the euro to a four-year low against the dollar.
Financial stocks ranked among the worst performers, with both the KBW Banks index down 3.51%. JPMorgan Chase & Co shed 2.3% to $38.19, while Bank of America Corp slipped 2% to $15.50.
The Dow Jones industrial average tumbled 259.67 points, or 2.53%, to 9,995.61. The Standard & Poor’s 500 index lost 29.67 points, or 2.69%, to 1,073.16. The Nasdaq Composite index dropped 64.89 points, or 2.82%, to 2,238.14.
Further exacerbating the pressure on Wall Street were concerns from Europe about Societe Generale’s derivatives business. The company said it would not comment on market rumors.
There have been nine days since 1998 when payrolls data was reported and the SPDR S&P 500 exchange-traded fund (ETF) opened down 1% or more, according to Bespoke Investment Group. On those days, the fund rose an average of 1.2% from open to close.
The ETF was down 2.7% on Friday afternoon.
Chris Burba, a short-term market technician at Standard & Poor’s in New York, cited a support level for the S&P 500 at 1,070, a recent low for the index. If the S&P closes below that level, he said, “The risk of sustaining a decline beneath the February low would increase.”
BP Plc avoided a decision on whether to pay its next quarterly dividend as it faced heavy political pressure to put the payout on hold while it fights the oil spill in the Gulf of Mexico. BP’s US-listed shares fell 4.4% to $37.53.
Dow component McDonald’s Corp slipped 1.5% to $66.83 after it recalled 12 million “Shrek”-themed drinking glasses. US officials warned consumers to stop using them because they contain the toxic metal cadmium.
The Labor Department said the US economy added 431,000 jobs in May -- far short of the 513,000 that Wall Street had expected.
Even so, analysts said it didn’t alter their view that the economy is stabilizing, with many expecting unemployment will remain high for some time.
Decliners were carrying the day, outnumbering advancers on the New York Stock Exchange by a ratio of 8 to 1, while on the Nasdaq, about six stocks fell on the Nasdaq for every one that rose.
The CBOE Volatility Index or VIX, Wall Street’s favorite barometer of investor fear, shot up 15.7% to 34.08 in mid-afternoon trading.