Dow Plummets on More Weak Labor Market News


The Dow Jones Industrial Average is planted firmly in the red this morning following the third data release to signal a weakening labor market this week. Down 122 points as of 11 a.m. EDT, the index has a steep climb back to breakeven, with little help on the way from additional economic data releases.

And it was going so well...
Jobs data has been a big thorn in the market's side all week. Following two other disappointing data points, this morning's employment situation report was no different. Though analysts had expected an addition of 200,000 jobs in March, the month only delivered a paltry 88,000. And though the overall unemployment rate fell 10 basis points to 7.6%, it was mostly due to people dropping out of the labor market, according to the Labor Department -- not a good sign.

The new trend of a weakening labor market may induce broader effects on the economy, as GDP may be revised to show lower consumer spending. It will also take its toll on the financial sector, which is following the Dow south this morning.

Financials fall again
American Express is one of the Dow's biggest losers this morning, down 2.65% so far in trading. The personal finance company was at a 52-week high just a little over a week ago following the news of FDIC insurance being added to its prepaid cards, as well as a 150-million-share buyback program. But continued concerns over the labor market may have hit the premium credit card company, which relies on consumer spending to generate revenues through interest. Another blow may have come in the form of a downgrade to "hold" by Jefferies Group analysts yesterday. Though other firms have reiterated buys and higher price targets, the company's average rating remains a hold.

Travelers Companies is down 0.87% so far this morning, making it the second-biggest financial loser for the Dow. Despite being a hedge fund and analyst favorite, the insurer is down -- though unlikely to stay there. Though insurance firms have to rely on consumer spending as well, their products are more necessary than items purchased on a credit card, for instance. Several firms have reiterated "buy"s for the company in the past week, with a price target of $88. The stock traded this morning at $83.61.

JPMorgan has been on a downward trend for the past few weeks, with continued scrutiny from federal investigators regarding its London Whale losses likely to incite a continued sense of uncertainty among investors. But the bank recently won a substantial victory in a court case that may help it avoid some other legal uncertainty in the future. The victory came in the form of a judge dismissing a large portion of the case, in which European bank Dexia charged that JPM knowingly sold it bad mortgage-backed securities before the financial crash. Though not all securities in question were thrown out of the lawsuit, 65 out of 70 should be considered a big win for the bank.

Bank of America is always under the watchful eye of investors, which can sometimes lead to high volatility without much reason. But this week's labor market disappointments have only stifled the bank a bit. Down only 0.17% as of this writing, B of A is the winner of the financial losers. This week produced mixed news for the bank, with a tally in its win column for the rise in global investment banking fees, a settlement with the National Credit Union Administration over the sale of bad mortgages, and a court ruling against the bank in favor of insurer MBIA. So far it seems that the good news is outweighing the bad, but BAC investors should keep an eye out for the consumer credit report later this afternoon -- it could hit the financials hard if the disappointing news trend continues.

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Fool contributor Jessica Alling has no position in any stocks mentioned, but you can contact her here. The Motley Fool recommends American Express. The Motley Fool owns shares of Bank of America and JPMorgan Chase & Co.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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