Stocks not recovering from early session plunge

Stocks tumbled Friday on news that the U.S. economy added no new jobs last month.

The jobs report was the weakest in almost a year. It renewed fears that the U.S. might slip back into recession. Treasury yields fell and gold rose as investors piled into investments seen as less risky than stocks.

The Dow Jones industrial average was down 172 points, or 1.5 percent, to 11,321 at 11:20 a.m. EST. The Standard & Poor's 500 index fell 20, or 1.6 percent, to 1,182. The Nasdaq composite index slipped 39, or 1.6 percent, to 2,507.

All 30 stocks in the Dow fell. Only one, Verizon Communications Inc., turned positive briefly.

The losses wiped out most of this week's gains, leaving the Dow up just 0.3 percent. Stock indexes rose last week for the first time in five weeks.

Volume was thin ahead of the holiday weekend. Shares dropped Thursday, breaking a four-day rally. Analysts said many traders had sold shares before taking off a day early.

If more people were at work, Friday's sell-off would have been steeper, said Jack Ablin, chief investment officer at Harris Private Bank. "Investors are spending more time thinking about beach balls and barbeques than they are about the lousy economic data," he said.

The weakness of the Labor Department's closely watched jobs report surprised investors. The unemployment rate remained stuck at 9.1 percent. It has been above 9 percent in all but two months since May 2009.

Story: US economy created no job growth in August, data show

Previously reported job addition figures for June and July were also revised lower. The average work week declined. Hourly earnings also fell.

The report further dampened hopes that the economy will improve in the second half of the year. Stagnant hiring and declining wages leave consumers with little money to spend, hurting the overall economy. Consumer spending accounts for 70 percent the U.S. economy.

Cash poured into investments seen as lower-risk after the dismal jobs news. The yield on the 10-year Treasury note sank as low as 2.03 percent after the report, from 2.14 percent shortly before it came out. The yield rose later to 2.07 percent. Bond yields rise as their prices fall.

The price of gold rose 2.8 percent to $1,880. Fears that a stalling economy could reduce demand for oil and gasoline pushed benchmark crude oil down $2.64, or 3 percent, to $86.30 in morning trading.

The VIX, a measure of market volatility, rose 6 percent to 34. The index had fallen from a recent high of 48 on Aug. 8, when the Dow lost 634 points following a downgrade of the U.S. government's credit rating. It traded below 20 for most of the year.

Fears of another recession grew last month after the U.S. government debt was downgraded, markets swung wildly and global growth slowed. Consumer confidence plunged in August to a two-year low. A key category that tracks business investment fell sharply in July.

Recent data were more encouraging, suggesting weak but steady economic expansion.

European stocks also fell as negotiations about Greece's shaky finances appeared to break down. The fell even more after the U.S. jobs report. Germany's DAX fell 3.6 percent and France's CAC-40 fell 3.7 percent.

Bank of America Corp., the nations' largest bank, sank more than 6 percent after The Wall Street Journal reported that regulators had asked it to develop emergency plans because of its sagging share price and the weakening economy. Bank of America is down 44 percent this year, largely on concerns about legal costs related to shoddy mortgage investments that it sold.

Other big banks dropped on separate reports that the government is preparing to sue some of them, also over mortgage investments they sold that lost value in the housing market collapse. The regulator of Fannie Mae and Freddie Mac says banks lied about the quality loans that they pooled. JPMorgan Chase & Co. lost 3.6 percent and Goldman Sachs Group Inc. fell 4.6 percent. Capital One Financial Corp, Wells Fargo & Co. and Morgan Stanley all lost 4 percent.

Netflix Inc. plunged 8.3 percent after talks with a key provider of movies collapsed. Starz Entertainment said late Thursday that it won't renew a contract that allows Netflix to stream recently released movies and TV shows online.

The Dow, S&P and Nasdaq all had their worst August since 2001 as economic fears and instability in financial markets and European banks added to investors' worries.

Source: http://www.msnbc.msn.com/id/44370308/ns/business/

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