Jobs woes sink Wall Street

NEW YORK: Stocks tumbled 2 percent on Friday, Sept 2 after data showing zero jobs growth in August brought investors face-to-face with the prospect of another recession.

The declines left Wall Street lower for the sixth week out of seven as declining issues far outweighed winners on a light-volume day ahead of the long U.S. Labor Day holiday weekend.

Stocks had rebounded recently on expectations the Federal Reserve would introduce new stimulus to boost the sluggish economy. But the Labor Department's latest report underscores that action by the Fed alone cannot address the economy's deep problems.

"By itself the Fed can't restore confidence or create jobs, so any steps it might take won't be game-changing for the economic growth prospects," said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York, where he oversees about $171 billion in client assets.

Bank shares were again among the day's biggest losers, with Bank of America Corp tumbling 8.3 percent to $7.25, making it the top decliner on the Dow, where all 30 components fell. JPMorgan Chase & Co fell 4.6 percent to $34.63 and the KBW banks index lost 4.5 percent.

A U.S. housing regulator filed a lawsuit against Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs Group Inc and other big lenders over mortgage practices that led to losses at government-owned Fannie Mae and Freddie Mac.

There was no growth in nonfarm jobs in August as sagging consumer confidence discouraged already skittish businesses from hiring, keeping pressure on the Federal Reserve to provide more monetary stimulus to the economy.

U.S. President Barack Obama, in a speech set for Thursday, will unveil a jobs program he hopes will provide "meaningful" tax relief and help the nation's long-term unemployed, a top aide told Reuters Insider.

"The likelihood of more stimulus has increased dramatically as a result of this and some other recent data, but at this point it's unclear how much that will really help markets," said Derek Hoyt, chief investment officer at KDV Wealth Management in Minneapolis, Minnesota.

The Dow Jones industrial average was down 253.16 points, or 2.20 percent, at 11,240.41. The Standard & Poor's 500 Index was down 30.46 points, or 2.53 percent, at 1,173.96. The Nasdaq Composite Index was down 65.71 points, or 2.58 percent, at 2,480.33.

Friday marked the S&P's biggest drop in two weeks.

Despite the day's sharp decline, stocks were only modestly lower for the week, after a rally in the first three day of trading. For the week, the Dow fell 0.4 percent, the S&P lost 0.2 percent, and the Nasdaq was flat.

Losing stocks outnumbered winners by more than six-to-one on both the New York Stock Exchange and Nasdaq. The CBOE Volatility index, a gauge of investor fear, rose 5.9 percent.

Volume was light ahead of the holiday, with about 6.88 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.

Netflix Inc weighed on the Nasdaq, falling 8.6 percent to $213.11 after the collapse of its content distribution talks with pay-TV operator Starz Entertainment.

Energy shares dropped as U.S. crude futures fell 2.5 percent on concerns economic weakness could curb fuel demand. Chevron Corp dipped 2.1 percent to $96.41, while the PHLX Oil service sector index declined 3.3 percent.

As investors sought safer assets, gold prices climbed 3 percent. Newmont Mining was the S&P's top gainer, rising 3.2 percent to $64.47. - Reuters