U.S. stocks sold off today as three separate reports highlighted a bleak employment outlook, while corporate news pointed to an economic downturn.
The Dow Jones industrial average closed down 486.01, or 5.05%, at 9,139.27; the S&P 500 fell 52.98, or 5.27%, ending at 952.77; and the Nasdaq composite closed down 98.48, or 5.53%, at 1,681.64. All numbers are preliminary.
The Institute for Supply Management, a private industry group, this morning reported that its ISM services index fell to 44.4 in October, the lowest reading since the series was first compiled in 1997. The ISM had already reported Monday that its manufacturing index slumped to 38.9 last month, a 36-year low. Readings below 50 indicate a contraction in the sector.
Also, ADP Employer Services today announced that U.S. employers cut 157,000 jobs from their payrolls in October, the most since November 2002, while outplacement firm Challenger Gray & Christmas reported that 112,884 layoffs were announced in October, the most since January 2004.
The reports fueled fears that the government’s October employment report, due Friday, may be even weaker than forecast. Economists expect that 200,000 jobs were cut last month.
“The private sector has already lost 938,000 jobs between December 2007 and last September. I certainly expect that we’ll cross the 1 million mark Friday,” said David Resler, chief economist at Nomura Securities International in New York.
Separately, UBS analysts forecast a slowdown in air travel next year, while steelmakers reported a drop in demand.
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