Jobs report sends stocks tumbling

NEW YORK - Stocks tumbled yesterday for a second consecutive session after the government's February jobs report showed that employers had slashed payrolls last month. That compounded fears that the U.S. economy was succumbing to recession.

The Dow Jones industrial average fell 146 points, bringing its two-day slide to 370.

This week's declines in the Dow, the Standard & Poor's 500 index and the Nasdaq composite index to their lowest levels since 2006 came despite the Federal Reserve's announcement that it would take steps to aid credit markets.

The Labor Department's report that employers had cut jobs by 63,000 last month - the most since March 2003 - unnerved investors worried about the health of the economy. A gain of about 25,000 jobs had been expected. While the unemployment rate fell to 4.8 percent, the decline reflected people leaving the labor force.

The payroll numbers were announced minutes after the Fed had said it would take fresh steps to ease credit troubles.

Besides the weak job figures, investors were worried about the apparent lack of effectiveness of the Fed's campaign, according to Craig Peckham, an equity-trading strategist at Jefferies & Co.

"There is a growing sense that the Fed is trying to pull out all the stops and use all the tools they have but with little net effect," he said. "It just doesn't appear to be the quick fix that investors had been hoping for. What we've seen is people continuing to press very bearish bets."

The Dow fell 146.70, or 1.22 percent, to 11,893.69. The index had not closed below 11,900 since October 2006.

The S&P 500 index fell 10.97, or 0.84 percent, to 1,293.37 - its lowest close since August 2006.

The Nasdaq composite index fell 8.01, or 0.36 percent, to 2,212.49, the lowest the tech-dominated index had finished since September 2006.

Bond prices increased as investors sought defensive positions amid concerns about the economy. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.55 percent from 3.59 percent late Thursday.

It was a rough week for Wall Street - the Dow fell 3.04 percent, the S&P 2.80 percent and the Nasdaq 2.60 percent.

While unemployment remains low by historical standards, the loss of jobs reported by the Labor Department stirred concern among investors that it would result in a slowdown in consumer spending.

Paul Nolte, director of investments at Hinsdale Associates Inc., said the job losses in February were not surprising.

"The trend for the last year and a half has been either job losses or very small gains. That is what you would expect in a contracting economy, and we think the economy has been in a recession for two or three months," he said.

The dollar also continued to drop this week, helping push prices for several commodities to records. Many commodities are traded in dollars, so a weak greenback can make their prices rise.

Gold, often regarded as a defensive investment, surged to near the psychological benchmark of $1,000 an ounce, though it fell back somewhat late in the week to close yesterday at $973.20.

The plans announced by the Fed yesterday seemed to briefly send stocks higher but failed to quell Wall Street's nervousness about the economy.

Steven Lehman, manager of Federated Investors' Market Opportunity Fund, was doubtful of the effectiveness of the Fed's efforts.

The Russell 2000 index of smaller companies fell 2.67, or 0.40 percent, to 660.11.

Declining issues outnumbered advancers about 5 to 3 on the New York Stock Exchange, where volume totaled 1.70 billion shares.

Japan's Nikkei stock average closed down 3.27 percent. Britain's FTSE 100 closed down 1.15 percent.