Market Summary

Stocks went from moderately negative in the premarket to a straight out decline today as the Labor Department released its Employment Situation for the month of June. The Dow Jones industrials lost 223.32, or 2.6 %, to 8,280.74, the lowest close since May 22. The Standard & Poor’s 500 index fell 26.91, or 2.9 %, to 896.42 and the Nasdaq composite index fell 49.20, or 2.7 %, to 1,796.52. The Russell 2000 index of smaller companies fell 19.61, or 3.8 %, to 497.85.

Investors moved out of equities and into bonds, driving the yield on the 10 year U.S. Treasury note to 3.50% Energy prices tumbled on fear of slow economic growth and lagging demand. Crude futures declined almost 8% for the week, hovering around $66 per barrel for August delivery.

Declining issues outnumbered advancers by about 5 to 1 on the NYSE, which extended trading till 4:15 after technical glitches in filling orders. Volume was extremely light on the last day before the long holiday weekend, which made valuations even more volatile.

June Employment Situation Casts Doubt Over Economic Condition…

Employers cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high of 9.5 %; compared to Wall Street estimates of 350,000 job losses with an unemployment rate of 9.6%. Workers also saw weekly wages fall, suggesting Americans will have little appetite to spend and the economy’s road to recovery will be bumpy.

Factoring in the disenfranchised and others who are under employed, the real unemployment rate stands at 16.5 % in June; the highest on records dating to 1994. All told, 14.7 million people were unemployed in June.

Today’s report marked the 18th straight month of job loss in the United States; further weakening consumer spending and the overall attitude of a strong, robust economic recovery in the near term.

What’s the Play?

After pulling back from 2nd quarter highs, both the Dow and S&P are solidly negative for the year. Stocks were hugely overvalues after the 40% run up from the March lows; will institutional investors short the market below 8,000 on the blue chips, or will they put fresh money to work?

Morning Outlook

Stocks were mixed in Europe Friday, a day after tumbling following the disappointing jobs data in the U.S. In afternoon trading, the FTSE 100 index of leading British shares was up 22.70 points, or 0.5 %, at 4,256.97, while Germany’s DAX fell 8.96 points, or 0.2 %, to 4,709.53. The CAC-40 in France was 3.12 points, or 0.1 %, higher at 3,119.53.

Overnight in Asia, markets were also mixed in their reaction to the economic data out of Wall Street. Japan’s Nikkei 225 stock average dropped 60.08 points, or 0.6 %, to 9,816.07, and Hong Kong’s Hang Seng closed up 25.35 points, or 0.1 %, to 18,203.40

U.S. markets are closed today for the Independence Day Holiday (thankfully!) after yesterday’s sharp decline, which will be reviewed later as we are in the midst of the longest decline in equities since March.

Currencies and Commodities

Major currencies were mixed against the greenback Friday. The dollar traded at 95.973 yen, gaining 0.029% in the currency market. European currencies fell for the 2nd straight day against the dollar on fear that interest rate cuts may be n order to revive a worse than expected economic situation. The euro depreciated 0.1305% to $1.3985 while the pound lost 0.4331% to $1.6322. Gold rose $1.10 to $932.10 an ounce, while silver rose 0.09% at $13.42. Light, sweet crude for August delivery fell another 72 cent to $66.01 a barrel: a 1.08% decline.

Economic Calendar

No release of any data on this holiday Friday here in the good ole US of A