Dow falls to 2004 low

The Dow Jones industrial average fell to a new 2004 low today as investors bailed out of stocks in the wake of a disappointing jobs report and continuing high oil prices.

The Nasdaq composite index and Standard & Poor’s 500 also marked new year-to-date lows for the second session in a row.

Payroll figures released early today showed employers added just 32,000 jobs last month, data low enough to warrant worries that a slowing in the economy in June may have been more just a brief pause.

Combined with oil prices still hovering near 44 a barrel, investors sold off heavily for a second straight day, worried that inflation and slow job growth would interrupt the economic recovery for a sustained length of time.

The Dow fell 147.70, or 1.5%, to 9,815.33, the lowest close on the Dow since November 28.

Broader stock indicators also fell sharply. The Standard & Poor’s 500 index dropped 16.73, or 1.6%, to 1,063.97, and the Nasdaq was down 44.74, or 2.5%, at 1,776.89.

It was the lowest close for the S&P 500 since December 10, and the lowest for the Nasdaq since August 26, 2003.

For the week, the Dow dropped 3.2%, the S&P 500 fell 3.4% and the Nasdaq plummeted 5.6%. It was the worst weekly performance for the Dow since the second week of March, and the worst week of the year for the other two indexes.

The July job report reflects the weakest increase in hiring since December and comes after a revised gain of just 78,000 in June, even less than previously reported. Economists had forecast the creation of roughly 243,000 jobs for July.

Analysts said the weak employment data raised new doubts about what the Federal Reserve board of governors will do next week when it meets to discuss interest rates.

The Fed had widely been expected to raise rates by a quarter percentage point to 1.5%.

The job figures “were a big surprise and they clearly rocked the market,” said Hugh Johnson, chief investment officer at First Albany Corp. “Now the debate will be intense about what they (the Fed) will do next week at their meeting, very intense. It creates just enough uncertainty.”

The questions about what the policy-makers might do was reflected by a surge in demand for bonds, briefly pushing the interest rate on the benchmark 10-year note as low as 4.17%, a level not seen since the spring.

Bond yields move in the opposite direction of their price.

On the stock market, decliners included Halliburton, which faces accusations of accounting fraud in a new lawsuit brought by investors. The company’s shares were down 44 cents at 29.67.

Shares of General Motors tumbled 1.05 to 41.49 following the company’s announcement that it was recalling all Saturn Vue sport utility vehicles manufactured since 2001.

Reflecting the uncertainty in the job market, Labour Ready, which recruits and provides day labourers, saw its shares fall 68 cents to 12.20.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.51 billion shares, up from 1.39 billion shares traded on Thursday.

The Russell 2000 index of smaller companies was down 12.71, or 2.4%, at 519.65, also a new low for the year.