Stocks fall sharply after weak jobs report

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By DANIEL WAGNER, Associated Press

Stocks fell sharply Friday after the release of a dismal report on job creation in the United States. The Dow Jones industrial average dropped more than 200 points, briefly erasing what was left of its gain for the year.

The Standard & Poor's 500 index and Nasdaq composite index both fell more than 1.5 percent in the opening minutes of trading.

American employers added just 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up to 8.2 percent from 8.1 percent. Economists had forecast a gain of 158,000 jobs.

A half-hour into trading, the Dow had recovered slightly and was down 160 points at 12,233. The Standard & Poor's 500 index was down 19 points at 1,291. The Nasdaq was off 42 at 2,785.

"The big worry now is that this economic slowdown is widening and accelerating," said Sam Stovall, chief equity strategist at S&P Capital IQ, a market research firm.

Traders are waiting to see what governments and central banks might do to juice global economic activity, Stovall said. Otherwise, the losses would be even deeper, he said.

The weak jobs report sent traders stampeding into U.S. government bonds as a safe investment. Bond prices rose sharply, and the yield on the benchmark 10-year U.S. Treasury note fell to 1.46 percent, the lowest on record.

The price of gold also shot higher. It rose $37 an ounce to $1,601. For much of the past three years, investors have bought gold for safety during a turbulent time for the world economy.

Stocks fell broadly. Energy companies and financial stocks led the market lower. The price of a barrel of oil fell more $2.66 to $83.87, extending a monthlong slide.

Caterpillar, which depends heavily on world economic demand, fell $2.63, or 3 percent, to $85.03. It was the worst performer of the 30 stocks that make up the Dow.

The job picture remained dark elsewhere in the world. Unemployment in the 17 countries that use the euro currency stayed at a record-high 11 percent in April, and unemployment rose spiked to almost 25 percent in Spain.

There were also signs that growth in China, which was a bulwark during the global recession, is slowing significantly. China's manufacturing weakened in May, according to surveys released Friday.

Stocks were down considerably in Europe. The benchmark stock index fell more than 3 percent in Germany and Greece and more than 2 percent in France. British stocks were down but fared slightly better.

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