Wall Street stocks tumbled yesterday for the second day in succession, dimming hopes that the US market had been bouncing along at its bottom after a moderate rally that lifted it off five-year lows just over a week ago, writes Conor O'Clery.
The immediate cause was a fresh set of weak economic data that added to anxieties about the US economy earlier in the week from a slowdown in manufacturing and sluggish growth figures for the second quarter.
Added to that were bleak reports from several companies including Disney, and the threat of bankruptcy at United Airlines. The Dow closed at 8,313.13, down 2.27 per cent, and the Nasdaq fell 2.51 per cent to close at 1,247.84.
Non-farm payrolls increased by a disappointing 6,000 in July after a gain of 66,000 in June, leaving the unemployment rate unchanged at 5.9 per cent.
"Today the statistics are out that show that the unemployment rate is holding steady," said US President George W Bush, conceding however that "we've got a lot of work to do to make sure people can find work".
Average hourly earnings gained 0.3 per cent and are up 3 per cent in the past three months. The index of aggregate hours worked fell 0.6 per cent and analysts said that unless hours rebounded in the months ahead, third-quarter real gross domestic product could remain weak.
The fall in the hours worked is usually a sign that productivity has also suffered. Before the recession that began early in 2001, the US economy had been creating an average of 200,000 jobs a month.
Most of the increase in payrolls came in the service industry, which added 46,000 jobs, but the manufacturing industry continued to eliminate jobs and fell by 7,000. However, personal spending surged back in June after holding steady in May, raising hopes that American consumers who drive two-thirds of the world's biggest economy were putting the stock market slump behind them.
Mr Bush signed legislation yesterday authorising $28.9 billion (€29.3 billion) in emergency funds for the Pentagon, US homeland security efforts and New York's recovery from the September 11th attacks. He also welcomed legislation giving him enhanced "fast-track" authority to negotiate trade deals with other governments which he said he would sign on Tuesday. The "trade promotion authority" had lapsed in 1994. "This trade Bill is going to help a lot. It's going to help our ranchers, it's going to help our farmers, it's going to help people find jobs," Mr Bush said.
