Stocks zigzag after June jobs report finds businesses hired fewer workers than forecast

Stocks trade in tight range after weak jobs report

NEW YORK — Stocks traded in a tight range Friday after a disappointing jobs report added to investors’ concerns that the economic recovery is losing steam.

The Dow Jones industrial average was little changed after falling six straight days. It fell about 9 points in late afternoon trading following the government’s morning announcement that private employers added 83,000 jobs last month. That was fewer than the 112,000 analysts had forecast. Broader indexes also zigzagged.

Trading was light ahead of the long Independence Day weekend. Stocks headed for their second straight losing week.

Reports on jobs earlier in the week had diminished expectations for the snapshot of the labor market. Payroll company ADP said private employment was weaker than expected, while the government said initial claims for unemployment benefits rose unexpectedly last week.

Investors are focused on business hiring because that makes up the bulk of the country’s work force. And overall jobs numbers have been skewed in recent months by the hiring of temporary census workers. Businesses aren’t adding to payrolls as quickly as most investors would like.

“The small businessman refuses to play here,” said Linda Duessel, equity market strategist at Federated Investors in Pittsburgh. She said business leaders don’t yet have the confidence to hire and are instead relying on temporary workers. The enduring jobs problems are raising concerns that the economy will begin sliding again. Many economists say that’s unlikely but still a worry.

“We’re going to need, as a market, something to make us believe that the double-dip scenario is wrong,” Duessel said. “A soft patch is normal.” She said earnings reports for the April-June quarter could boost sentiment if companies also give upbeat forecasts.

The government cut 225,000 census jobs in June. Overall, 125,000 workers lost their jobs last month, worse than the expected drop of 110,000. The unemployment rate did fall unexpectedly, dropping to 9.5 percent from 9.7 percent. Economists polled by Thomson Reuters had expected it to rise to 9.8 percent. However, the decrease came as some people gave up looking for work. That means they weren’t counted among the unemployed.

The government also reported that factory orders fell in May for the first time in nine months. The 1.4 percent drop was the biggest since March 2009, when major stock indexes hit a 12-year low. The drop unnerved traders because manufacturing has been one of the strongest areas of the economy.

Pessimism has been growing since late April about the health of the economy. The Dow dropped 10 percent for the second quarter, which ended Wednesday, while the Standard & Poor’s 500 index lost 11.9 percent.

“Clearly there is a loss of momentum,” said Bob Baur, chief global economist at Principal Global Investors, referring to the recovery. He said the slide in stocks could do as much as anything to hurt the economy by eroding confidence. Still, he said a double-dip is unlikely in part because incomes are ticking higher and consumers are slowly adding to spending. “We just don’t see the typical things that start another recession,” Baur said.

In the final hour of trading, the Dow fell 8.58, or 0.1 percent, to 9,723.95. The Dow hasn’t fallen for seven straight days since October 2008, at the height of the financial crisis.

The Standard & Poor’s 500 index fell 0.05, or less than 0.1 percent, to 1,027.32, while the Nasdaq composite index fell 0.72, or less than 0.1 percent, to 2,100.64. Both indexes have fallen nine of the past 10 days.

Demand for Treasurys weakened after spiking earlier in the week. The yield on the 10-year note, which moves opposite its price, rose to 2.98 percent from 2.95 percent late Thursday. Its yield is used as a benchmark for interest rates on some mortgages and other consumer loans.

Crude oil fell 77 cents to $72.18 per barrel on the New York Mercantile Exchange. Gold rose.

Daniel Penrod, senior industry analyst for the California Credit Union League, said the handoff from government stimulus to private hiring will work eventually but the question is when. Until there is more certainty about the direction of the economy some businesses are going to put off hiring.

“I don’t see business really taking huge risks right now to build when they don’t think people are going to be walking through the door,” Penrod said.

The coming week could bring more insight into the economy if companies begin to drop hints about their earnings and forecasts. U.S. markets are closed Monday in observance of Independence Day. Tuesday brings a report on services businesses, which make up the biggest chunk of the economy.

Rising stocks narrowly outnumbered those that fell on the New York Stock Exchange, where volume came to 813 million shares, compared with 1.3 billion traded at the same point Thursday.

The Russell 2000 index of smaller companies fell 3.06, or 0.5 percent, to 601.70.

Britain’s FTSE 100 rose 0.7 percent, Germany’s DAX index fell 0.4 percent, and France’s CAC-40 rose 0.3 percent. Japan’s Nikkei stock average rose 0.1 percent.