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Jobs report drives down stocks

September 2, 2011 |  7:40 am

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Stock markets experienced their biggest declines in more than a week after new unemployment data stoked fears that the U.S. economy is slowing.

The Dow Jones industrial average was down in early trading 202.07 points, or 1.8%, to 11,291.50.

The declines came after the Labor Department reported that the U.S. economy added no new jobs in August, leaving the unemployment rate at 9.1%. The numbers were artificially lowered by 45,000 Verizon workers who were out of their jobs on strike, but economists still had expected more new jobs.

"The broad message is that even if the U.S. economy doesn't start to contract again, any expansion is going to be very, very modest and fall well short of what would be needed to drive the still elevated unemployment rate lower," the chief economist at Captial Economics, Paul Ashworth, wrote in a note to clients.

Even before the jobs report came out, European markets had headed down. Leading indexes in Germany and France were down recently more than 3%.

Bank stocks are again leading the U.S. markets down after reports Thursday night that the government is suing several big banks over losses from mortgage backed securities during the financial crisis.

RELATED:

Banks brace for more troubles

New-home slump keeping door shut on U.S. recovery

No August job growth as unemployment rate holds at 9.1%

-- Nathaniel Popper

twitter.com/nathanielpopper

Photo credit: Spencer Platt / Getty Images

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