Tag - NPTE

The Russell 2000 (NYSE: IWM) and the other major U.S. indices tumbled as news of a poor jobs report raised fears about the health of the U.S. economy. The small-cap index fell 23.44 points, or 3.15%, to 721.57, its sixth consecutive decline. The Dow Jones Industrial Average (INDU) dropped 256.54 points, or 1.96%, to 12,800.18.

On a year-to-date basis, the Russell 2000 is down 5.80%, while the Dow has lost 3.50% and the S&P 500 has dropped 3.86%.

Stocks fell hard and the bears dominated the session today on news before the start of trading that nonfarm payroll employment rose a paltry 18,000 in December, according to the U.S. Labor Department. Economists were projecting job growth of 70,000 following an upwardly revised figure of 115,000 in November.

“Service sector job gains were offset by sharp job losses in construction and manufacturing,” said Arun Raha, vice president of Economic Research and Consulting for the North American operations of reinsurance company Swiss Re, in an email. “Within services, a cautious retail sector hired less than usual this holiday season.”

The unemployment rate jumped to 5% from 4.7%. That translates to a total of 7.7 million unemployed people, an increase of 474,000 from the level in November. Economists were forecasting the jobless rate to rise to 4.8%.

“This slowdown in employment growth, in an environment of high oil prices, soft manufacturing and weak confidence, will soften consumer spending,” Raha continued. Consumption comprises about 70% of U.S. gross domestic product.

Does that mean a recession is all but inevitable? Not necessarily.

“The latest data imply at least a 50/50 chance of recession,” said Raha. “Unemployment insurance claims are still below the typical rate preceding a recession, so a recession may not happen.”

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are down as news of poor economic reports raise recession fears. At 2:45 p.m. ET, the small-cap index had lost 25.56 points, or 3.30%, to 720.45. The Dow Jones Industrial Average (INDU) was off 250.12 points, or 1.92%, to 12,806.60.

Stocks are falling across the board following news of a lackluster December jobs report that once again ignited fears of a recession.

The U.S. Labor Department announced before the start of trading that nonfarm payroll employment increased just 18,000 in December, well below economists’ projections of 70,000 new jobs following an upwardly revised level of 115,000 in November.

The unemployment rate jumped to 5%, the highest level in more than two years, from 4.7%, while the employment-population ratio slipped to 62.7% from 63.4% in November.

The numbers point to the weakest job creation since August 2003 as U.S. economic growth is faltering amid tighter credit and the ongoing slump in the housing market.