Stocks Fall Roughly 2 Percent Amid Fears That Recovery Is Slowing
Boom goes the recovery.
On Wednesday, U.S. stocks tumbled roughly two percent, bringing the Dow Jones Industrial Average down by 2.2 percent, or nearly 280 points below its starting day position, and the S&P down by 2.3 percent, or 30.6 points, according to CNBC.
The Dow and S&P haven't experienced a drop that large since August of last year.
The stock market drop came on the same day ADP Employers Services, a payrolls processor, released their May jobs report, which estimated that the U.S. added only 38,000 private-sector jobs in May, compared to the 180,000 expected by most analysts.
Combined with the troubling housing market, the numbers look troubling for long-term economic growth prospects in the U.S, according to chief economist for Capital Economics Paul Ashworth. "It looks like this recovery has hit a second 'soft patch,' which for a recovery that is less than two years old is troubling," Ashworth said, according to Forbes.
JPMorgan, in its second revision to its forecasts of the U.S. economy in as many weeks, downgraded its economic growth forecast for the second quarter of the year, the Wall Street Journal reports. Both JPMorgan and Bank of American saw their stock prices fall 3.42 percent and 4.26 percent, respectively, according to CNBC.
It's unclear exactly what led to such the private-sector hiring snag in May, but in Forbes, chief U.S. economist for High Frequency Economics Ian Shepherdson says to look at energy prices.
"As far as we can tell, employers have hugely overreacted to the surge in oil prices, which has slowed but not killed consumption," Shepherdson said.
Declining stock prices can also be attributed in part to car sales taking a hit and growth in the manufacturing sector slowing to a pace not seen in 20 months.
Treasury bonds fell to their lowest yield since last December, WSJ reports.
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The Huffington Post James Sunshine First Posted: 06/01/11 08:45 PM ET Updated: 08/01/11 06:12 AM ET