Wall Street Slides After Jobs Report

By JACK HEALY
The New York Times
Published: Jan 10, 2009

After waiting nervously for new unemployment numbers, Wall Street took a hard look at the grim data released on Friday.

Stock markets fell in early trading as investors sifted through government data showing that unemployment had jumped to its highest point in 16 years. While the job losses fell short of the direst predictions, they were still bad enough to spark a broad decline.

At 11:30 a.m., the Dow Jones industrial average was down more than 80 points or 1 percent while the wider Standard & Poor’s 500-stock index fell 1.4 percent. The technology-heavy Nasdaq composite, which rose sharply on Thursday, fell back more than 2 percent.

On Friday, the Bureau of Labor Statistics reported that unemployment rose to 7.2 percent in December, from a revised 6.8 percent in November. Employers cut 2.6 million jobs in 2008, some 524,000 in December alone.

“The numbers confirm what we already know — that the economy’s in a lot of trouble,” said Ryan Detrick, an analyst at Schaeffer’s Investment Research. “The question is whether the Fed’s done enough to bring us out of this malaise. There’s a lot of uncertainty out here right now.”

The unemployment numbers heighten fears that the economic downturn is continuing to gather momentum, and investors said they were worried that corporations were getting ready to report losses and reduced profits as earnings season gets under way.

Already, Wal-Mart, the world’s largest retailer, cut its earnings forecast for the fourth quarter. Time Warner has said it expects to report an operating loss for 2008, and the computer-chip maker Intel warned that it expected its fourth-quarter revenues to decline 23 percent from the previous year.

And on Thursday, a new report on retail sales said that 2008 had been the worst holiday shopping season in more than 30 years, raising the prospect that more stores will close or seek bankruptcy protection in 2009.

The dour economic reports and earnings warnings have stalled a tentative rally that lifted stocks in the first days of the new year, as optimistic investors hoped that a new administration and a government stimulus package could help restart the flagging economy.

On Friday, crude oil prices continued to slide, falling $1.05 a barrel to $40.65, dragging down energy stocks.

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