Bond Prices Surge, Stocks Slump on Jobs Data --- Gloomy Report About Payrolls Batters DJIA
A gloomy employment report sent the Dow Jones Industrial Average tumbling 23.81 points to 3330.29, even though the bad economic news led the Federal Reserve to slash short-term interest rates. The dollar fell.</br></br>Rapid-fire events before the stock market opened for trading forced investors to quickly weigh a downbeat employment report against the potential stimulus of the Fed's move. An hour before stock market trading began, the Labor Department disclosed that the nation's struggling economy lost 117,000 jobs last month, instead of generating the 100,000 or so that most economists and analysts had expected.</br></br>The report touched off an immediate bond market rally, followed within minutes by the Fed's decision to cut the discount rate -- the rate the central bank charges member institutions for short-term loans -- to 3% from 3.5%.</br></br>Arthur Micheletti, chief market strategist at Bailard, Biehl & Kaiser, said the employment report yesterday may be a prelude to more bad news on the earnings front.</br></br>"The Fed's move is confirmation that the economic data are weaker than had been expected," he said. "That means that corporate profits will probably be worse than expected." But he added that if stock prices fall sharply in response to weak earnings, the decline could set up a trading opportunity for nimble investors.