While the February jobs report was worse than analysts' estimates, many market participants had braced for even grimmer data, giving stocks a temporary bounce in the morning which quickly faded.
"My sense is we haven't discounted all the negatives out there as of yet," said Rob Lutts, president of Cabot Money Management.
Investors have yet to fully account for all the gloomy news on the economy, Lutts said, and also for the depth of pessimism that still exists in the market. "People are extremely emotional beings," he said.
The Labor Department reported Friday that employers cut 651,000 jobs last month, and the unemployment rate jumped to 8.1 percent. The government also revised its December and January job loss figures up to 681,000 and 655,000, respectively.
The market has been plummeting this week through barrier after barrier - the Standard & Poor's 500 index tumbled more than 4 percent Thursday to its lowest close since September 1996.
"We just don't have very strong buying support," said Darin Newsom, senior analyst at DTN.
In midday trading, the Dow Jones industrial average fell 10.11, or 0.2 percent, to 6,584.33, after earlier rising as much as 161 points. The S&P 500 index fell 2.12, or 0.3 percent, to 680.43, while the Nasdaq composite index fell 14.65, or 1.1 percent, to 1,284.94.
The Russell 2000 index of smaller companies slipped 0.86, or 0.3 percent, to 348.59.
The Dow and S&P were down nearly 25 percent year-to-date as of Thursday's close. The selloff on Thursday came as China shot down the market's hopes for additional economic stimulus spending, Citigroup Inc. stock dropped below $1 a share, and worries escalated about a possible bankruptcy by General Motors Corp.
GM shares continued their freefall Friday as speculation about the automaker's future swirled. On Thursday members of the Obama administration's auto task force met with the company's stakeholders to weigh the company's options.
GM's auditors have said they have doubts about whether the company can overcome its staggering losses. GM shares dropped 39 cents, or 21 percent, to $1.47.
Banks continued to slash their dividends in anticipation of more loan losses this year.
Wells Fargo & Co. on Friday cut its dividend to 5 cents a share from 35 cents, following last week's move by JPMorgan Chase & Co. to reduce its dividend to 5 cents as well. Citigroup and Bank of America Corp. had already slashed their quarterly dividends to a penny per share.
Wells Fargo shares rose Friday, but other financial stocks slumped. Wells Fargo added 53 cents, or 6.5 percent, to $8.65. JPMorgan dropped $1.27, or 7.7 percent, to $15.33, while Bank of America slipped 1 cent to $3.16.
Bond prices fell. The yield on the benchmark 10-year Treasury note rose to 2.84 percent from 2.81 percent late Thursday. The yield on the three-month T-bill was unchanged at 0.20 percent.
About two stocks fell for every one that advanced on the New York Stock Exchange, where volume came to a light 610 million shares.
Gold prices rose as the dollar traded mixed against other major currencies.
Light, sweet crude rose $1.06 to $44.67 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 rose 0.02 percent, Germany's DAX index fell 0.8 percent, and France's CAC-40 fell 1.4 percent. Earlier, Japan's Nikkei stock average fell 3.5 percent, and Hong Kong's Hang Seng index fell 2.4 percent.
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New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
http://accesswdun.com/article/2009/3/218392