US stocks pull back after jobs slide

Wall Street retreated again today after readings on jobs and manufacturing indicated that businesses and workers still face a tough economy.

The major indexes ended a turbulent week narrowly mixed.

A massive quarterly loss at General Motors Corp. and rising oil prices also gave investors reason to trade cautiously, but the market was considerably calmer than the first four sessions of the week, when the Dow Jones industrials rose or fell by triple digits each day.

Today’s reports were not as poor as many analysts had anticipated. Nonetheless, they portrayed an economy that was still sagging as it entered the second half of the year. The Labour Department said jobs fell for the seventh straight month in July and the unemployment rate rose to 5.7%. The report arrived after data on Thursday showed an unexpected jump in jobless claims to a five-year high.

“It reinforces the idea that we’re seeing a steady, but not dramatic, decline in employment, which is likely to last for some time,” said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn.

Meanwhile, the Institute for Supply Management, said manufacturing activity was flat in July. Given Thursday’s disappointing report on gross domestic product growth, Wall Street is becoming more certain that the US is in a recession – and one that could be prolonged.

US recessions since the First World War have lasted about 10 months, on average, but have ranged from as little as six months to as long as 16 months, Sheldon said.

The flagging economy has sapped consumers’ ability to spend freely, which in turn is hurting profits at many big companies. GM said it lost US$15.5bn (€10bn) in the second quarter, more than analysts predicted and the car maker’s third-worst loss in its history.

There was also more bad news about construction; the Commerce Department reported that building activity declined in June. And the price of oil rose US$1.02 (€650,000) to US$125.10 (€80.42), retreating from an earlier gain of more than four dollars, but still signalling that its steep decline of recent weeks has at least temporarily been halted.

The Dow fell 51.70, or 0.45%, to 11,326.32. The Dow ended the week down 0.39%.

Broader stock indicators also lost ground today. The Standard & Poor’s 500 index fell 7.07, or 0.56%, to 1,260.31, and the Nasdaq composite index fell 14.59, or 0.63%, to 2,310.96.

The S&P finished the week up 0.02%, and the Nasdaq finished up 0.21%.