Labor Report Spreads Gloom on Wall Street

Wall Street extended its decline today after readings on jobs, manufacturing, and construction indicated that businesses and workers still face a tough American economy.A massive loss at General Motors Corp. and a rebound in oil prices also gave investors reason to trade cautiously.Today’s economic reports were not as poor as many economists had anticipated, but they were nonetheless gloomy. The Labor Department said jobs fell for the seventh straight month in July and the unemployment rate rose to 5.7%. The report arrived after data yesterday showing an unexpected jump in jobless claims.“It reinforces the idea that we’re seeing a steady, but not dramatic, decline in employment, which is likely to last for some time,” the chief market strategist at RDM Financial Group in Westport, Conn., Michael Sheldon, said.The Commerce Department also reported today that building activity declined in June, while the Institute for Supply Management said manufacturing activity was flat. Given yesterday’s disappointing report on gross domestic product growth, Wall Street is becoming more certain that America is in a recession — and one that could be prolonged. American recessions since World War I have lasted about 10 months, on average, but have ranged from as little as six months to as long as 16 months, Mr. 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 $15.5 billion in the second quarter, more than analysts predicted and the automaker’s third-worst loss in history.In late morning trading, the Dow Jones industrial average fell 42.82, or 0.38%, to 11,335.20.Broader stock indicators also lost ground. The Standard & Poor’s 500 index fell 5.26, or 0.42%, to 1,262.12, and the Nasdaq composite index fell 17.10, or 0.74%, to 2,308.45.Light, sweet crude rose $1.29 to $125.67 a barrel on the New York Mercantile Exchange, after shooting up as high as $128.60.Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.97% from 3.95% late yesterday. The dollar was mixed against other major currencies, while gold prices fell.GM, one of the Dow industrials, saw its shares sink 83 cents, or more than 7%, to $10.24 after posting its quarterly loss.Another big drag on the stock market was Nortel Networks Corp. The Canadian telecommunications equipment maker reported a wider second-quarter loss, and its stock fell $1.12, or nearly 15%, to $6.52.Overall, companies’ quarterly results have been surpassing Wall Street’s forecasts. And beyond financial and consumer discretionary sectors, corporate earnings have been increasing.“There is some room for optimism on the corporate profit front,” Mr. Sheldon said. “But a lot will depend on consumers and energy prices for the remainder of the year.”A few pharmaceutical stocks suffered sell-offs today. Biogen Idec Inc. and Elan Corp. PLC fell due to safety concerns related to multiple sclerosis therapy Tysabri. Biogen fell $17.21, or about 25%, to $52.55, and Elan tumbled $8.97, or about 45%, to $11.08.Drug maker Schering-Plough Corp. dropped $1.48, or 7%, to $19.60, after the Food and Drug Administration’s surprising rejection of the company’s anesthesia-recovery treatment.The Russell 2000 index of smaller companies rose 1.93, or 0.27%, to 716.45.Declining issues were about flat with advancers on the New York Stock Exchange, where volume came to 478.5 million shares.Overseas, Japan’s Nikkei stock average fell 0.14%. In afternoon trading, Britain’s FTSE 100 fell 1.15%, Germany’s DAX index declined 1.28%, and France’s CAC-40 fell 1.78%.

Labor Report Spreads Gloom on Wall Street

Labor Report Spreads Gloom on Wall Street

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