US stocks closed lower Friday, weighed down by poorer-than-expected non-farm payrolls and downbeat oil prices.
The broad-based S&P 500 closed down 0.3% at 2,099, while the S&P Midcap 400 was 0.4% lower at 1,500.
The S&P Smallcap 600 was 0.5% lower at 709, while the wider small-cap Russell 2000 ended down 0.55% at 1,164.
The US oil benchmark West Texas Intermediate ended down 0.79% at $48.78.
Midsession
US stocks, blue-chip and small-cap, fell at midsession on Friday after the most disappointing non-farm payrolls report in six years.
U.S. non-farm payrolls rose by just 38,000 in May, the smallest gain since September 2010 and far below an expected 164,000. All 105 economists polled by Reuters had expected a higher number.
While the jobless rate fell three-tenths of a percentage point to 4.7 percent, the lowest since November 2007, that was partly due to people dropping out of the labour force.
The S&P 500 was down 0.5% at 2,095, albeit off its lowest point right after the Employment Report.
The S&P Midcap 400 was down 0.7% at 1,496, led by Wisdomtree Investments (NYSE:WETF) down 6.3% at $11.14.
The S&P Smallcap 600 was down 0.9% at 707 - after hitting a fresh 2016 higher on Thursday - and led by Stone Energy Corp (NYSE:SGY) down 7.1% at $0.39.
Energy stocks also dominated the fallers in the S&P 600, with names like Rex Energy Corp (NYSE:REXX) and Bonanza Creek Energy (NYSE:BCEI) among the big fallers.
Not surprisingly, those stocks were also influenced by the pride of crude oil. The US benchmark West Texas Intermediate was down 1.4% at $48.48.
Open
The jobs report for May came as a shock to the market, prompting a triple-digit fall on the Dow Jones.
Against expectations of a rise in payrolls of 160,000, the same as in April, a mere 38,000 jobs were added, which was the lowest increase in around five years.
“The Fed may latch on to the official unemployment rate, which fell to 4.7% in May from 5.0% in April, but this is still a lagging indicator and therefore a poor one upon which to base monetary policy,” suggested Russ Mould, investment director at finance house AJ Bell.
James Smith, an economist at German bank Berenberg, noted: “Even despite the known Verizon strike, which took 35k workers out of the employment data this month, the jobs shortfall appeared to relatively broad-based.”
“In our opinion, this may well put the final nail in the coffin for a June hike, with confirmation of this potentially coming from Chair Yellen's speech on Monday,” Smith said.
Despite the prospects of a June interest rate hike heading rapidly down to zero, the market reacted with alarm to the figures, with the Dow Jones average off 137 points at 17,702 and the broader-based S&P 500 down 18 points (0.9%) at 2,087.
The US dollar took a kicking, which at least had the effect of making gold, which is priced in dollars, relatively cheaper, and the price of the yellow stuff rose 2.5% to $1,242.10 an ounce.
Mid-caps were equally hard hit, with the S&P 400 down 14 points, or 0.9%, at 1,493. Small caps, as measured by the Russell 2,000 index, failed to dodge the deluge, with the index off 10 points (0.8%) at 1,161.
There was some mergers & acquisitions activity around to cheer up investors.
The First Marblehead Corporation (NYSE:FMD) shot up 25% to $4.85 as it agreed to a takeover by FP Resources USA Inc. FP is offering US$5.05 a share in cash, valuing the finance company at around US$65mln.
The American Depositary Receipts (ADRs) of Avianca Holdings SA (NYSE:AVH) advanced 16% to $6.01 as the Wall Street Journal reported the airline is in the sights of United Continental Holdings Inc (NYSE:UAL) and Delta Air Lines Inc (NYSE:DAL).
Talen Energy Corp (NYSE:TLN) also rose 16%, to $13.91, as it agreed to be taken private by buy-out specialist Riverstone in a $14 a share deal that values the independent power producer at around $1.8bn.