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Falling Jobs Growth Leads to a Plunging Dow

By Dan Carroll - Apr 5, 2013 at 2:33PM

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Stocks decline sharply on the heels of a disappointing jobs report.

If you were hoping to end your investing week in the green, think again. Stocks are swinging sharply lower, and the Dow Jones Industrial Average (^DJI 1.76%) has found a home in the red today following March's disappointing jobs numbers, which dropped precipitously from February. As of 2:25 p.m. EDT, the blue-chip index has fallen 85 points, or 0.58%, with many component stocks shedding 1% or more. With the market on a roll this year, investors have been looking for a correction, and today they got one.

Jobs can't get a grip
Payrolls added a mere 88,000 jobs in March -- the lowest monthly gain in nine months and more than 100,000 short of analysts' projections. That was also a huge drop-off from February's gain of nearly 270,000 jobs. This report isn't the end of the world: Many economists have predicted that the economy's fast start to 2013 would slow down in the middle of the year, and the country still has years of growth ahead of it before it reaches pre-recession unemployment levels. However, it's a disappointing blow to many who were encouraged by signs that the economy was accelerating its comeback.

The disappointment has hit Dow stocks hard, and none more so than American Express (AXP 2.56%). The financial firm has lost 2.6% so far today. Lower employment translates to lower consumer spending as Americans tighten their wallets -- an outcome far from ideal for American Express. The stock has still picked up more than 13.5% since the start of 2013, but a sluggish middle of the year could see shares drop off from their recent highs as credit card spending slows. If the economy bounces back soon, however, American Express will be poised to rise right along with it.

Home Depot (HD 1.87%) is another stock that has done well this year -- shares have risen more than 11.3% since the start of 2013 -- and is being hit hard today. The home retail stock is down 1% so far. Although a sluggish economy is not good for anyone, Home Depot has less to fear: With residential construction on the rise and housing starts picking up fast, this company's well-positioned to capitalize on the rebound in the housing market.

Big Oil's on the downswing as well today. Shares of Chevron and Exxon-Mobil (XOM 0.98%) have fallen 0.7% and 1%, respectively. Both companies are recovering from headaches. Chevron recently announced that it has finally finished repairing a damaged refinery in Richmond, Calif., that was hit by a fire last year -- an incident that cost the company around $1 million in fines from state safety regulators. Still, that's much better than Exxon's current plight. The company pledged to cover the costs of cleaning up thousands of barrels of oil that spilled in Arkansas. This won't hit Exxon's pocketbook too hard, but it has left a smudge on the company's reputation.

One stock has managed to beat the odds today, however: Aluminum manufacturer Alcoa (AA) has pulled in a modest 0.2% gain to rank among the few Dow winners today. The stock will report earnings on Monday to kick off the Dow's earnings season. While the year has been a tough one so far for Alcoa, investors will soon get the chance to see just how well this company's doing. The slowdown in China's infrastructure boom and the continuing crunch in Europe have hurt Alcoa and its fellow metals producers hard; shares of Alcoa have shed more than 8.5% year to date.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,212.96 (1.76%) $575.77
Alcoa Inc. Stock Quote
Alcoa Inc.
AA
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$97.59 (0.98%) $0.95
American Express Company Stock Quote
American Express Company
AXP
$169.60 (2.56%) $4.23
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$308.46 (1.87%) $5.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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