by Adam Shell, USA Today
- Dow, S&P 500, Nasdaq heading sharply lower
- Investors stunned by surprisingly weak March job creation
- Japan stocks soar on unprecedented stimulus effort
Stocks plunged Friday after the government said just 88,000 jobs were added to non-farm payrolls in March and the unemployment ticked down to 7.6% from 7.7% in February.
The Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq 100 composite index were trading sharply lower after the Labor Department's monthly employment report was released at 8:30 a.m. ET. The number of jobs created in March was less than half the consensus estimate on Wall Street. In late morning trading, the Dow was down about 120 points, or 0.8%, to 14,486, the S&P was off 14 points,or 0.9%, to 1546 and the Nasdaq was off 38 points, or 1.2%, to 3187.
The jobs report is expected to add to fears the economy and job growth are in danger of stalling this spring for the fourth straight year. The fears are rising as stocks are trading near all-time highs and could be the catalyst to spark a price correction.
Investors fled to the safety of government bonds. The yield on the 10-year U.S. Treasury plummeted to 1.68%, lowest since December, from 1.81% Thursday.
The jobs bummer is likely to prompt talk that the start of seasonal stock market weakness could be upon us.
"Here comes the 'Sell in May' talk," Don Rissmiller, a stock market strategist at Strategas Research Partners, told clients after the weak March jobs numbers were released. Rissmiller, of course, is referring to the historical data that shows stock performance in the six-month period from May through October is far less robust than the bullish November through April period.
But not every interpretation is a negative one.
Rissmiller advised clients not to give up on stocks. One bullish outcome of the softer jobs picture, he adds, is that it will likely allow the Federal Reserve to continue its easy-money policies. A recent fear circulating on Wall Street is that the good start to the year on the economic front would force the central bank to start throttling down its stimulus. What's more, many investors have been looking for a better entry point into stocks amid a record-breaking run.
Global markets are also being supported by similar easy-money policies being implemented in Europe and Japan, which should also provide a helping hand to stocks.
Investors must also keep in mind that the economy did create new jobs, albeit less than expected, but growth is growth, adds Steve Blitz, chief economist at ITG Investment Research.
Today's weak employment report indicates that "the economy is expanding but not accelerating" at a breakneck pace, he said.
The action in U.S. stocks came as Japan's market rallied sharply. Japan's main benchmark Nikkei 225 index reached a five-year record high today, after the central bank's unprecedented stimulus plan announced Thursday raised hopes of an economic turnaround. The Nikkei index ended 1.6% higher to 12,833.64. The sweeping shift in monetary policy came as a surprise to analysts.
"The size of monetary easing announced yesterday far exceeded expectations," analysts at DBS Bank in Singapore said in a commentary.
Elsewhere in Asia Friday, markets sank on fears of a recent outbreak of a deadly bird flu in China, ongoing political tensions between the U.S. and North Korea, and whether U.S. markets will swoon if the March jobs repost is weaker than expected.
In China, six people have died and authorities have ordered the slaughter of all poultry at a Shanghai market where the virus was detected.
Hong Kong's Hang Seng tumbled 2.7% to 21,726.90. South Korea's Kospi dropped 1.6% to 1,927.23..
In Europe, benchmark indexes in Great Britain, Germany and France were trading 1.5% despite better-than-expected economic reports on Germany's economy.
Benchmark oil for May delivery was down 49 cents to $92.77 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.19 to finish at $93.26 per barrel on the Nymex on Thursday.
Contributing: Rachel Huggins, The Associated Press