Economic Woes Slam Stocks

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Gloomy data fanned fears the once robust economic recovery may be losing steam, igniting the first five-week losing streak for the blue chips in almost seven years.

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Today's Markets

The Dow Jones Industrial Average was down 97.3 points, or 0.79%, to 12,151, the S&P 500 slipped 12.8 points, or 0.97%, to 1,300 and the Nasdaq Composite fell 40.5 points, or 1.5%, to 2,733. The FOX 50 was off 8.1 points to 909.

The Dow rallied on Tuesday, adding more than 100 points, however, over the next three sessions the blue chips shed more than 400 points.  The broad S&P 500 that is closely-watched by market participants also fell for five straight weeks, but for the first time since July 2008.

The state of the economic recovery has been a major theme in recent sessions. A flurry of disappointing economic data has prompted many Wall Street economists to cut their expectations for the pace of economic growth.

"Economic data over the past few months have been extremely disappointing," economists at Deutsche Bank, one of many investment banks to cut back its economist forecasts, wrote in a research note. "We expect the economic expansion to remain intact, but at a more modest pace than what we previously envisioned."

The monthly non-farm payroll report is considered an important gauge of the health of the labor market and the broader economy. The economy added  54,000 jobs in May, far shy of analysts' estimates of a gain of 150,000.  The unemployment rate unexpectedly ticked higher to 9.1% from 9% the prior month, higher than the 8.9% Wall Street forecast. The jobless rate is at the highest level since December 2010.

"The weak hiring shows a broad-based slump in confidence after economic momentum started to decelerate from early April," wrote Kevin Logan, chief U.S. economist at HSBC, in a research note.

The public and manufacturing sector shed a combined 24,000 jobs, while the private sector added 83,000 jobs. Total payroll gains were the worst since September 2010, when the economy lost 29,000 jobs.

Many economists blame two factors for the sudden downshift in the pace of recovery: high energy prices and disruption to the automotive sector caused by the tsunami and earthquake that devastated Japan in March.

"Key economic indicators are flashing warning signs," wrote Nigel Gault, chief U.S. economist at IHS Global Insight in a research note.

"Pressures from rising commodity costs, plus supply-chain disruptions from Japan's natural disaster and extreme weather domestically, have combined to slow the economy's momentum."

Also on the economic front, a report from the Institute for Supply Management showed the service sector continued expanding in May. The gauge rose to 54.6 in May from 52.8 the prior month, slightly better than expectations of a reading of 54.  Readings over 50 indicate expansion in the industry.

Energy markets, which sold off sharply in early trading, got a late-day boost from a significantly weaker dollar.

Light, sweet crude fell 18 cents, or 0.18%, to $100.22 a barrel. Wholesale RBOB gasoline gained 3 cents, or 0.86%, to $2.99 a gallon.

Gas prices on the consumer level have been little changed this week.  A gallon of regular gas at the pump cost $3.79 on average nationwide, down from $3.98 last month, but still well above $2.72 from last year.

In metals, gold was up $9.70, or 0.63%, to $1,542 a troy ounce.  Silver slumped a penny, or 0.03%, to $36.19 a troy ounce.

The euro gained 0.9% against the U.S. dollar and the greenback fell 0.76% against a basket of world currencies.

Corporate News

Fiat agreed to purchase the U.S. Treasury Department's remaining 6% stake in Chrysler.

Newell Rubbermaid (NYSE:NWL) slashed its full-year guidance on Friday, sending the companys stock tumbling more than 10%.

Foreign Markets

The English FTSE 100 was up 0.12% to 5,855, the French CAC 40 gained 0.02% to 3,891 and the German DAX climbed 0.49% to 7,109.

In Asia, the Japanese Nikkei 225 was down 0.66% to 9,492 and the Chinese Hang Seng slid 1.3% to 22,950.

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