Stock futures extend decline after jobs report
News of a rapidly weakening job market put Wall Street on track for a sharply lower open Friday. The Labor Department's report that employers slashed 533,000 jobs in November had investors worrying about a long and deep recession.
The job loss took investors by surprise, coming in much higher than the 320,000 economists had expected. Meanwhile, the unemployment rate soared to a 15-year high of 6.7 percent from 6.5 percent in October.
According to the report, job losses were widespread, hitting manufacturing, construction, retail, financial and other sectors. It was the biggest monthly loss of jobs since 1974.
While the rise in the unemployment rate wasn't as steep as the 6.8 percent forecast, investors clearly believe the employment outlook remains bleak - especially as the layoffs keep coming. On Thursday, bellwether companies like AT&T Inc. and DuPont Co. announced they were cutting thousands of jobs.
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The fear on Wall Street is that a rising unemployment rate will, among other things, lead to a more severe pullback in consumer spending, which is a crucial component to helping the economy rebound. Weak retail sales reports for the month of November released Thursday added to these concerns.
"The news is consistently dreadful and is likely to remain so for some time as layoffs continue and economic reports come in," said Gary Townsend, president and chief executive of Chevy Chase, Md.-based private investment group Hill-Townsend Capital Inc.
Dow Jones industrial average futures fell 170, or 2.02 percent, to 8,232, after being down about 100 points prior to the jobs report. Standard & Poor's 500 index futures fell 23.70, or 2.80 percent, to 823.80, while Nasdaq 100 index futures fell 28.25, or 2.49 percent, to 1,106.75.
Meanwhile, investors also are awaiting a second day of congressional hearings with the heads of Detroit's top three automakers, who are appearing on Capitol Hill in an effort to save their troubled industry.
General Motors Corp., Ford Motor Co. and Chrysler LLC are collectively seeking $34 billion in emergency funding. While the market largely expects the companies to win some sort of government aid, support for the troubled carmakers wasn't guaranteed.
Later Friday, the Federal Reserve will release consumer credit data for October.
(Copyright 2008 by The Associated Press. All Rights Reserved.)