US shares fall on job market worries

Published: 2009/10/01

NEW YORK: Wall Street shares ended lower for the second consecutive day Wednesday after data showing a steep drop in private sector payrolls fueled increased jitters on the economic outlook.

The Dow Jones Industrial Average shed 29.92 points (0.31 per cent) to close at 9,712.28 in a roller-coaster session.

The technology-heavy Nasdaq composite fell 1.62 points (0.08 per cent) to 2,122.42 and the Standard & Poor’s 500 index dipped 3.54 points (0.33 per cent) to 1,057.07.

The key stock indices however ended way off their intra-day lows, especially the Dow which lost more than 100 points at one stage.

The market was unmoved by a government report that the economy shrank at a revised 0.7 per cent pace — better than the previous figure of a 1.0 per cent decline — in the second quarter.

The new figure was stronger than the 1.2 per cent decline predicted by most analysts and the hefty 6.4 per cent in the first quarter.

The market instead focused on a larger-than-expected drop in private sector payrolls and depressing data on midwestern manufacturing activity.

“The GDP revision should have heartened traders and given them some reason to believe that second half economic growth could be nearly robust. But the notion that a jobless recovery can be sustained is starting to fade,” said Douglas McIntyre of 24/7 Wall St.

“Unemployment will almost certainly rise above 10 per cent before the end of the year and stay above 9.5 per cent through most of 2010,” he said.

Payrolls firm ADP said Wednesday that the US private sector shed 254,000 jobs in September, higher than the 200,000 expected by most analysts.

The ADP report came ahead of Friday’s monthly report on the US job market, which is expected to show a loss of another 180,000 jobs and the unemployment rate rising from the current 9.7 per cent to 9.9 per cent.

Also Wednesday, the Institute for Supply Management-Chicago’s purchasing manager’s index — a key regional business barometer — fell to 46.1 in September, lower than 50.0 in August and most analyst expectations of 52.0. -- AFP