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US stocks stumble on jobs data
Share prices fall sharply following poorer report on US jobs and declining euro.
Last Modified: 05 Jun 2010 02:06 GMT
Jobs data showed weak hiring with May figures falling far short of investors' expectations [EPA]

US stocks have slid to their lowest levels in four months as investors were hit by the jitters after the government released job figures for May.

The US labour department said in the report released on Friday that jobs created in May fell far short of the 513,000 that Wall Street had expected, and a drop from the 218,000 in April.

The Dow Jones industrial average dropped 323.31 points, or 3.15 per cent, to 9,931.97. The Standard & Poor's 500 Index lost 37.95 points, or 3.44 per cent, to 1,064.88. The Nasdaq Composite Index tumbled 83.86 points, or 3.64 per cent, to 2,219.17.

Investors were also worried about another developing crisis in Europe, this time in Hungary.

Disappointing data

"It was extremely disappointing," Robert Froehlich, senior managing director of The Hartford Mutual Funds in Simsbury, Connecticut, told Reuters news agency.

"We know that employment is the lagging indicator, but ... we've been saying that for a year. There comes a time where we're really going to have to see that number pick up."

The US unemployment rate in May dropped to 9.7 per cent, from 9.9 per cent the previous month.

Even so, analysts said it didn't alter their view that the economy is stabilising, although gradually, with many expecting unemployment will remain high for some time.

"We interpret it that this is confirmation that we are not going to have a V-shaped type recovery, but are in a below-average recovery," Hank Smith, the chief investment officer of Haverford Trust Co. in Philadelphia, told Reuters.

"We think it will morph into a sustainable expansion, albeit below average."

Hungarian debt

Meanwhile investors were also jittery about Hungary's announcement of a Greek-style debt problem, as worries that Europe's sovereign debt troubles could spread flared again.

The possibility of a Hungarian debt crisis pushed the euro to a four-year low against the dollar on Friday.

The fears were fuelled after a top government aide said he supported the view that Hungary only had a slim chance of avoiding the kind of debt crisis that plunged Greece into financial instability.

"In Hungary the previous government falsified data. In Greece, they also falsified data," Peter Szijjarto, the spokesman for Viktor Orban, the Hungarian prime minister, said.

"In Greece the moment of truth has arrived. Hungary is still before that."

The remarks spooked investors and knocked more than two per cent off its currency, the forint, against the euro.

Source:
Agencies
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