Market Summary

The blue chips saw their biggest drop since summer time to close out the week, as concerns that the economic recovery won’t be robust enough to sustain the seven-month stock rally. Financials came under heavy pressure after an accounting expert projected a $10 billion write-down for Citigroup (C).

The Dow Jones Industrial Average fell 249.85, or 2.5 %, to 9,712.73, The broader S&P 500 index lost 29.92, or 2.8 %, to 1,036.19, while the Nasdaq dropped 52.44, or 2.5 %, to 2,045.11. In other trading, the Russell 2000 index of smaller companies fell 17.45, or 3 %, to 562.77.

Government bond prices rallied and the U.S. dollar rose as money went into lower yielding investments. The yield on the benchmark 10-year Treasury note fell to 3.39 % from 3.50 %. The higher dollar sent crude and other commodities lower. Oil tumbled $2.38 to $77.49 a barrel on the NYMEX for the December contract.

Week in Review

The Dow Jones industrial average closed the week down 259.45, or 2.6 %, at 9,712.73. The Standard & Poor’s 500 index fell 43.41, or 4 %, to 1,036.19. The Nasdaq composite index fell 109.36, or 5.1 %, to 2,045.11. The Russell 2000 index fell 38.09, or 6.3 %, for the week to 562.77.

Goes to Show Government Grew Economy 3.5%

Two major economic reports hit the street in the morning relating to the consumer as we enter the pivotal holiday shopping season. The Commerce Department consumer spending fell 0.5 % last month, the largest drop since December, after a 1.4 % increase in August. The drop matched economist’s estimates as the cash for clunkers program ended.

A dismal job market headlined by a near 10% national unemployment rate appeared to weigh on consumers, as the street saw consumer sentiment for October slipping to 70.6 from 73.5 last month.

We Spent How Much Per Job Created?!

Nearly 650,000 jobs have been saved or created under President Barack Obama’s economic stimulus plan, the government said Friday, and the White House declared the nation on track to meet the president’s goal of 3.5 million by the end of next year.

New job numbers from businesses, contractors, state and local governments, nonprofit groups and universities were released, showing 640,329 positions credited to the stimulus, according to the independent federal board monitoring the program’s progress.

Teachers and other education employees represent the largest number of jobs in the report — about 325,000. With state budgets in crisis, federal aid helped governors avoid major cuts in education, which officials said spared many teachers and school workers from the unemployment line.

Wow, so we spent about $200,000 per job assuming that the White House target of 3.5 million is hit. We will get an indication of the labor market in the 4th quarter, which is typically extremely weak on Friday in the premarket with the October Employment Situation; brought to you by the lovely folks at the Labor Department.