A period of relative calm on Wall Street ended today as stocks tumbled in the final hour of trading on growing investor anxiety about the government’s November employment report.
The major indexes each fell more than 2.5%, including the Dow Jones industrial average, which dropped nearly 216 points after rising in seven of the last eight sessions.
It was clear that investors were worrying that tomorrow’s employment report would show a further deterioration in the job market. Employers have already cut 1.2 million jobs in the year to October, leaving the unemployment rate at a 14-year high of 6.5%. Economists expect the Labor Department will report that the jobless rate rose to 6.8% in November and that companies cut another 320,000 jobs.
“It’s all about jobs and right now the outlook is pretty downbeat,” said Alan Skrainka, chief market strategist with Edward Jones in St Louis.
Jeff Kleintop, chief market strategist at LPL Financial Services, said many institutional investors are bracing for the jobs report to show 400,000 jobs were lost from the economy. Anything worse than that number could cause a steep drop in the market, he said, while anything above could “stoke renewed selling”.
“The market has been very reactionary to the data points, particularly key economic indicators like the employment report due out on Friday,” he said. “The day is made in the last hour.”
The late-session decline followed a decent run for stocks, which closed higher in seven of the previous eight sessions. It also came as the heads of the Detroit carmakers appeared before Congress with hopes of persuading sceptical lawmakers to save their troubled industry.
While the market expects the Detroit companies will be able to win some aid from Capitol Hill, support for the troubled companies was not assured.
General Motors Corp, Ford Motor Co and Chrysler LLC are collectively seeking 34 billion dollars in emergency aid.
Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said investors are likely taking money off the table ahead of the employment report and that there was disappointment over the appearance of the heads of the US carmakers on Capitol Hill.
“There was no clarity coming out of the autos. People were expecting some clarity,” he said.
The Dow Jones industrial average fell 215.45, or 2.51%, to 8,376.24.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 25.52, or 2.93%, to 845.22, and the Nasdaq composite index fell 46.82, or 3.14%, to 1,445.56.
The Russell 2000 index of smaller companies fell 14.23, or 3.14%, to 439.53.
The number of stocks declining on the New York Stock Exchange outpaced those advancing by nearly 3 to 1. Volume came to 1.47 billion shares compared with 1.3 billion shares traded yesterday.
Yesterday, Wall Street looked past another stream of bad economic news and finished sharply higher after fluctuating between positive and negative territory for most of the day.
Bond prices rose again, sending yields to record lows. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.56% from 2.67% late yesterday.
The yield on the three-month T-bill, considered one of the safest investments, fell to below 0.01% from 0.02% late yesterday.
The dollar was mixed against other major currencies, while gold prices fell.
Among the economic data arriving today, the Labor Department said new claims for jobless benefits fell unexpectedly last week but the number of people continuing to receive government aid reached a 26-year high.
The Commerce Department said factory orders plunged by 5.1% in October. It was the steepest decline in eight years.
Retailers stood out today, although the market’s late decline pared the gains of the sector.
The advances came even as companies posted huge sales declines for November.
The Goldman Sachs-International Council of Shopping Centers sales index fell 2.7% to its lowest reading since its inception in 1969. Expectations had been so low that investors appeared relieved that the month was over and that the sales reports were in hand.
Macy’s Inc said its same-store sales, or sales at stores open at least a year, fell 13.3%. Same-store sales are a key measure of a retailer’s health. Macy’s advanced 44 cents, or 6%, to 7.83 dollars.
Target Corp said its same-store sales for the month fell 10.4%. The stock fell 44 cents, or 6%, to 34.04 dollars.
Many shoppers looking for discounts turned to Wal-Mart Stores Inc. The world’s largest retailer posted a better-than-expected 3.4% increase in sales. In the US, grocery sales helped results. Wal-Mart rose 73 cents to 55.11 dollars.
Among the carmakers, GM fell 79 cents, or 16%, to 4.11 dollars, while Ford fell 19 cents, or 6.7%, to 2.66 dollars. Chrysler is not publicly traded.