U.S. stocks plunge after the government says the economy added far fewer jobs than expected, adding to concerns about a global slowdown.
NEW YORK (TheStreet) --U.S. stocks plunged in early trading Friday after the government said the economy added far fewer jobs than expected, adding to concerns about a global slowdown.
The Dow Jones Industrial Average was down by 199 points, or 1.6%, at 12,194, pushing the blue-chip index into negative territory for 2012.
The S&P 500 was losing 22 points, or 1.7%, at 1288. The Nasdaq was shedding 51 points, or 1.8%, at 2776.
The Labor Department said early Friday the economy added 69,000 jobs in May, well below the 150,000-plus jobs economists were expecting.
The private sector added 82,000 jobs, compared to market expectations of 164,000.
The unemployment rate ticked up to 8.2%. Economists were expecting the rate to remain steady at 8.1%.
The report also included downward revisions to March and April numbers. The economy created only 143,000 jobs in March, compared to 154,000 estimated earlier.
In April, nonfarm payrolls rose by only 77,000, a significant reduction from the 115,000 originally estimated.
The pace of job creation has decelerated sharply since the first quarter, when the average monthly gain was 226,000.
Demand for safe-haven assets rose amid heightened risk aversion, pushing the yield on the 10-year Treasury note below 1.5% for the first time ever. Gold was rising amid renewed expectations for additional quantitative easing in the wake of the disappointing data.
"It's hard to get much worse than 69,000. Probably in the summer I would see the numbers going up a little bit, but if we're going to hover around 100,000 jobs added, I definitely see a QE3 coming," said Frank Fantozzi CEO of Planned Financial Services.
Global markets had already been trading weaker amid fresh signs of a slowdown in China and further weakness in Europe.
China posted its slowest manufacturing growth in more than a year, with the purchasing managers index falling to 50.4 in May from 53.3 in April.
Japan's Nikkei shed 1.2%, while Hong Kong's Hang Seng Index declined 0.4%.
European shares dropped amid reports of a further slowdown in manufacturing and rising unemployment in the 17-nation eurozone.
The eurozone PMI declined to 45.1 in May from 45.9 in April, marking a three-year low. Unemployment in the region hovered at 11%, with 17.1 million people now without jobs.
The FTSE in U.K. deepened losses, losing 1.3%, while Germany's DAX was plunging 3.2%.
In Germany, the yield on two-year bonds turned negative for the first time, indicating that investors were essentially paying for capital protection.
Meanwhile, the U.S. Bureau of Economic Analysis also released numbers on personal income and spending.
Personal income increased $31.7 billion, or 0.2% in April, down from 0.4% in March.
Personal consumption expenditure rose 0.3%, up from 0.2% in March.
The Institute for Supply Management's index of manufacturing activity dipped to 53.5 in May from 54.8 in April, below expectations for a reading of 54.
The Commerce Department said construction spending data rose 0.3% in April, compared toa forecast for a 0.4% rise.
Commodities markets were lower Friday. July oil futures were down by $2.88 at $83.65 a barrel, and August gold futures were reversing earlier declines, rising $30.4 to $1,594.60 an ounce.
The benchmark 10-year Treasury was higher by 26/32, lowering the yield to 1.476%. The greenback was reversing earlier gains, falling 0.24%, according to the dollar index.
In corporate news, BP(NYSE:BP) said Friday it has received "unsolicited indications of interest" for its 50% stake in TNK-BP, Russia's third-largest oil producer.
BP's stake in TNK-BP could be worth more than $30 billion, according to The Wall Street Journal. Shares were up 1.6%.
Wal-Mart (NYSE:WMT) holds its annual shareholder meeting Friday amid calls for Wal-Mart's CEO and chairman to be removed from the board after a bribery investigation in Mexico. Shares were lower by 0.7%.
--Written by Shanthi Bharatwaj in New York.