A day after global markets tumbled, a better-than-expected unemployment report may be cause for hope.
FROM THE DAILY BEAST | AUGUST 5, 2011
U.S. stocks finished with mixed gains and losses on Friday, as investors responded to progress in today's jobs report and in the eurozone's debt crisis. The Dow rose 61 points as investors learned that Italy will speed up austerity measures. Prime Minister Silvio Berlusconi pledged that Italy would balance its budget by 2013, one year earlier than originally planned. "The somewhat stabilizing news out of Europe is allowing us to bounce from very oversold levels," said the co-head of trading at First New York Securities. But the broader S&P 500 closed flat, and the Nasdaq finished down nearly 24 points.
Mexican billionaire Carlos Slim, the world’s richest man, lost $8 billion over the last four days as Mexico’s IPC index dropped 7.4 percent. The peso also dipped 2.5 percent against the dollar amid concerns that the struggling U.S. economy will affect demand for assets in Mexico. Slim, 71, saw his stock portfolio, which is valued at roughly $63 billion, drop 11 percent since July 29. That’s more than the 7.1 decrease in the Standard & Poor’s 500 Index. Three of his companies left the IPC, making matters worse for the billionaire.
Wall Street Slumps AgainDespite an initial flurry of gains following a better-than-expected jobs report, Wall Street remained in a slump on Friday after Thursday’s losses. The Dow Jones remained mostly flat, tumbling from a triple-digit gain at the opening bell on continuing fears of a double-dip recession in the U.S. and a bleak future for the euro zone. “There’s still a recovery but it’s teetering on the edge,” said Robin Marshall, a London investment manager. The jobs gain of 117,000, while stronger than expected, was not enough to put a serious dent in the unemployment rate, which still stands above 9 percent.
The U.S. unemployment rate budged slightly in July, dipping down to 9.1 percent, according to the government jobs report released Friday morning. Overall, 117,000 jobs were added, the best growth since April and significantly higher than expectations, which ranged around 75,000. Reports for May and June were also revised; June’s figures, initially set at 18,000, surged upward to 46,000. The better-than-expected news sent Wall Street ticking upward, with futures gaining by 1.2 percent immediately following the announcement and the Dow Jones Industrial Average was up 150 points on opening.
Among the less hopeful findings: The employment-population ratio fell to 58.1 percent, the lowest number on record since 1983. Government payrolls also dragged down growth, falling by 37,000 amid state and local budget cuts.
Following the Dow's massive plunge on Thursday, its worst drop in two years, global markets continued to dive around the world. Hong Kong's Hang Seng Index dropped 4.3 percent, while Japan's Nikkei fell 3.7 percent. The crash had continued through early trading in Europe, where London's FTSE and Frankfurt's DAX were down amid fears of a growing debt crisis in the euro zone. But a solid U.S. jobs report sent most European indexes rebounding.