Russell extends Thursday's slide after dreary jobs report

Small-cap stocks slumped this morning, extending the rout from Thursday’s session as investors woke up to the harsh news that America’s unemployment rate was approaching five-year highs. At 9:50 a.m. ET, the Russell 2000 (NYSE:IWM) was down 4, or 0.56%, at 714.62.

On Thursday, small caps collapsed, generating the largest one-day loss since early January, but the market still had bearish bullets in the holster after today’s dreadful employment report from the Labor Department. The jobs data showed that the nation’s unemployment jumped to 6.1% from 5.7% (the market was expecting the rate to hold steady), which was the highest point since December 2003. In addition, the headline figure on non-farm payrolls came in at a loss of 84,000 jobs, which was worse than the consensus estimate for a decline of 71,000 jobs. This marked the eighth consecutive monthly decline in payrolls, which hasn’t happened since the 2001 to 2002 time frame when the economy was emerging from recession.

“So far this year, 605,000 jobs have been lost. The economy has clearly slipped into a jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy,” Steven Wood, chief economist with Insight Economics, said in an email. “Over the past year, the number of unemployed people has increased by more than 2.24 million and the unemployment rate has increased by 1.4 percentage point. In the post World War II period, every time the unemployment rate has jumped by a full percentage point or more in the course of a year, the economy has been in a recession.”

Crude oil futures were down about $1 dollar a barrel before the jobs report, but climbed back toward steady prices as the dollar retreated off overnight highs against the euro, and tumbled versus the yen. In overnight trading, copper prices hit a seven-month low in Europe, but since copper is considered a key economic indicator, it’s actually one of those commodity markets that investors aren’t that crazy . . .

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