US stocks tumbled 2 percent on Friday after data showing zero jobs growth in August brought investors face-to-face with the prospect of another recession. Gold surged nearly 3 percent on Friday, hitting its highest level since last week's record, as investors sought refuge in safe haven assets following a bleak US employment report.
The declines left Wall Street lower for the sixth week out of seven as declining issues far outweighed winners on a light-volume day ahead of the long US Labour Day holiday weekend. Stocks had rebounded recently on expectations the Federal Reserve would introduce new stimulus to boost the sluggish economy. But the Labour Department's latest report underscores that action by the Fed alone cannot address the economy's deep problems.
"By itself the Fed can't restore confidence or create jobs, so any steps it might take won't be game-changing for the economic growth prospects," said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York, where he oversees about $171 billion in client assets.
The Dow Jones industrial average was down 253.16 points, or 2.20 percent, at 11,240.41. The Standard & Poor's 500 Index was down 30.46 points, or 2.53 percent, at 1,173.96. The Nasdaq Composite Index was down 65.71 points, or 2.58 percent, at 2,480.33. Friday marked the S&P's biggest drop in two weeks.
By 3:23 pm EDT (1923 GMT), spot gold was up $57.25, or 3.1 percent, at $1,881.69 per ounce. It earlier rose to a high of $1,879.30, its highest level since reaching its record at $1,911.46 on August 23. Benchmark US gold December futures on the COMEX exchange finished 2.6 percent, or $47.8 higher, at $1,876.90 an ounce. It rose as high as $1,887.40, also its highest since its August 23 record at $1,917.90.
Bank shares were again among the day's biggest losers, with Bank of America Corp tumbling 8.3 percent to $7.25, making it the top decliner on the Dow, where all 30 components fell. J.P. Morgan Chase & Co fell 4.6 percent to $34.63 and the KBW banks index lost 4.5 percent. Despite the day's sharp decline, stocks were only modestly lower for the week, after a rally in the first three-day of trading. For the week, the Dow fell 0.4 percent, the S&P lost 0.2 percent, and the Nasdaq was flat.
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