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Jobs report helps sink the markets

NEW YORK — Stocks posted modest losses Wednesday, a day after tumbling on fears about the health of banks and concerns that a six-month rally of 50 percent has left the stock market overheated.

A private sector report on unemployment gave investors new reason to fret about what is widely seen as the biggest problem facing the economy. The ADP National Employment Report found that employment fell by 298,000 in August following a revised loss of 360,000 jobs in July. The losses were the smallest since September 2008 but more than analysts had expected.

The report shapes expectations for the Labor Department’s monthly reading on jobs, which is due Friday. Unemployment has hit consumer spending, which accounts for about 70 percent of U.S. economic activity. Without more help from consumers, the economy will have trouble pulling out of the longest recession since World War II.

“Until Friday’s data comes, no one is really making any big bets,” said Neil Massa, senior trader at MFC Global Investment Management. “A little profit-taking looks healthy at this point.”

An increase in worker productivity couldn’t shake investors’ concerns about the economy. The Labor Department said output grew in the spring at the fastest pace in nearly six years while labor costs fell by the most in nine years. Productivity is the biggest factor in determining living standards because companies can afford to pay more if output increases. Investors also were disappointed by a report that factory orders rose 1.3 percent in July.

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