Resounding thud

Small-cap stocks took a sizable hit today and finished off the first full week of the New Year’s trading with a resounding thud as an unsettling report on employment rekindled worries about the recession, consumer spending and the credit crunch. The Russell 2000 (NYSE:IWM) closed down 20.71, or 4.13% at 481.30 and is now down 3.6% for the year, generating the largest one-day drop of 2009 in the process. Selling in small-caps was much more fierce than that seen in the Dow, which was only off 1.6% for the day; for the year, the Dow is down 2%, while the S&P 500 is down 1.4%.

In recent weeks, the market has often tried to rally in the face of troubling economic data, but the bulls just weren’t eager to shrug off this morning’s jobs report, which showed the unemployment rate rising to a 16-year peak. What’s more, unemployment is widely expected to climb in the next couple of months; earlier today, bond giant PIMCO chief Bill Gross said that “we’re only halfway home” as far as job losses are concerned in the U.S.

The headline figure on today’s employment report – the number of non-farm payroll jobs lost ...

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