financial
financial

Wall Street Slammed Following Jobs Report

Retail stocks suffered their worst one-day drop in 15 months on Friday.

financial/news

Retail stocks suffered their worst one-day drop in 15 months Friday, losing 4 percent as the U.S. recovery was called into question by slower-than-expected job growth in May and the euro’s descent to a new four-year low on renewed debt concerns.

The S&P Retail Index fell 17.61 points to 426.94, making for a 3.7 percent drop for the week. The Dow Jones Industrial Average fell well below 10,000, losing 3.2 percent, or 323.31 points, on the day to close at 9,931.97, a 2 percent decline for the week. Of the 172 stocks tracked by WWD, 140 fell last week, while two held steady and only 30 gained ground. (For more on stocks, see page 14.)

“It’s a very choppy environment out there, consumers remained very focused on price and value,” said Betty Chen, an analyst at Wedbush Securities, noting some stocks are now undervalued.

Nationwide, employers added 431,000 jobs last month, driven almost entirely by the hiring of 411,000 temporary Census workers, the Labor Department said. Private sector payrolls increased by just 41,000 and unemployment dropped to 9.7 percent from 9.9 percent in April.

Economists expected 500,000 new jobs for the month.

“This is unwelcome news for industries, like retail, that rely heavily on the mood of the American consumer,” said Sandy Kennedy, president of the Retail Industry Leaders Association.

The closely watched monthly jobs report also showed signs of retail skittishness, with stores trimming payrolls after adding workers earlier in the year.

Specialty stores cut 1,000 jobs to employ 1.39 million last month, while department stores trimmed 1,400 jobs from payrolls to employ 1.48 million.

“My first inclination on a lot of this report was, Two steps forward and one step back — this was the one step back,” said Scott Hoyt, senior director of consumer economics for Moody’s Economy.com.

The contraction in employment at apparel retailers in May, particularly for specialty stores, wasn’t enough to wipe out previous payroll gains, Hoyt said, but could indicate that retailers are wary of consumer spending levels.

In the manufacturing sector, apparel producers cut 1,500 jobs to employ 163,500. Textile mills, which manufacture apparel fabric, eliminated 500 jobs to employ 123,400. Textile product mills, which make mostly home furnishing and industrial fabrics, added 300 jobs to employ 122,400.

Europe is also trying to fight its way back as it tries to contain the debt crisis that started in Greece but has expanded and pushed the euro to a new four-year low below $1.20 Friday. The Eurozone’s GDP grew by a tepid 0.2 percent in the first quarter, following 0.1 percent growth in the fourth quarter.

With new concerns about Hungary adding to those about Greece and other nations, European markets finished the week with substantial losses. Paris’ CAC 40 was down 2.9 percent Friday, putting its drop for the week at 1.7 percent, while the FTSE 100, in London, lost 1.8 percent for a 1.3 percent weekly decline. In Frankfurt, the DAX held up somewhat better, dropping 1.9 percent on the day for a 0.1 percent contraction on the week.

load comments

ADD A COMMENT

Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.
News from WWD
Newsletters

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

LatestPublications
getIsArchiveOnly= hasAccess=false hasArchiveAccess=false