Friday, February 5, 2010

Stocks Suffer Worst Drop in More than Eight Months

Stocks end sharply lower, shedding up to 3% in some cases, and pushing the Dow Jones Industrial Average below 10,000 for the first time since November, though at final settle it stood at 10,002. The 270-point Dow drop is its worst showing in some nine months. Investors were reacting to European debt worries and concern the global recovery may suffer as a result. Commodities fell as the dollar gained against the euro.

Global markets tumbled on concerns about debt levels in Greece, Spain and Portugal. The euro hit a seven-month low against the dollar.

Domestically, the Labor Department triggered selling when it said unemployment claims rose 8,000 to a seasonally adjusted 480,000 last week. Economists had predicted claims would drop to 460,000. It was the fourth increase in the past five weeks, boosting claims to their highest level in two months.

The figures also raised questions about Friday's government report on jobs. It is expected to show employers added a small number of jobs but that the unemployment rate edged up to 10.1% from 10%, according to reports.

On the plus side, the Labor Department recorded a continuing increase in productivity, up by a seasonally adjusted 6.2% in Q4. Analysts had expected a 6% increase, as firms try to do more with fewer workers.

Mining and materials shares tumbled. Worries over the debt struggles of euro-zone countries Greece, Portugal and Spain fueled a flight from stocks to the safe-haven dollar, which hurt commodity prices denominated in the greenback, Reuters said

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