Wall Street closed out a fifth week of losses with more selling on Friday after an anemic jobs report strengthened the case that the economy was slowing, though analysts said indexes may stabilize in the near-term.
Selling was heavy in the morning following the payroll report, and the S&P 500 intermittently tested its April low at 1,294.70 until a bullish report on the services sector helped equities recover some losses.
Major indexes are trading at their lowest in six weeks, and the S&P is off 4.7 percent from highs reached in late April. However, fund managers say stocks have priced in macroeconomic uncertainty by now.
We don't see material downside from here, said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has $650 billion in assets under management.
A five percent correction is appropriate for the slowdown we're experiencing, and over the intermediate term, our expectation is that we'll regain some momentum, he said.
The government's payrolls report showed 54,000 jobs added in May, the weakest reading since September, while the U.S. unemployment rate rose to 9.1 percent from 9 percent in April.
The report followed recent reads on manufacturing, housing and the consumer that all pointed to slowing demand, prompting debate among investors about the duration of the economic softness. However, the read on the U.S. services sector, which comprises most of the economy, gave some hope that future data would improve.
Our view is that we're clearly seeing a slowdown, but you'd need a shock to the system to see things get much worse from here, said Andrew Goldberg, market strategist at J.P. Morgan Funds in New York. There's little room for error, but there are reasons to expect growth, and we don't see a whole heck of a lot more downside.
The Dow Jones industrial average <.DJI> slid 97.29 points, or 0.79 percent, to end at 12,151.26. The Standard & Poor's 500 Index <.SPX> fell 12.78 points, or 0.97 percent, to 1,300.16. The Nasdaq Composite Index <.IXIC> dropped 40.53 points, or 1.46 percent, to 2,732.78.
While the S&P 500 closed above its April low, analysts said that if that level was breached, technical momentum could take the index back toward its 200-day moving average at around 1,250.
All three indexes fell 2.3 percent during the week in what was the S&P 500's worst since mid-August.
However, stocks are still are positive for the year, with the Dow up 5 percent, the S&P 500 up 3.4 percent and the Nasdaq up 3 percent.
Newell Rubbermaid Inc
Dow component Wal-Mart Stores Inc
Forest Laboratories Inc
Decliners outnumbered advancers by a ratio of more than 2 to 1 on the New York Stock Exchange, while on the Nasdaq, nearly four stocks fell for every one that rose.
Volume was light, with about 6.84 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.
(Editing by Jan Paschal)