Evidence is accumulating that the economic recovery has lost part of his force. Which deflated a stock market rally and pushed the index for five consecutive weeks, the longest losing streak since mid-2008.
So, what is next? Do not hold out hopes for more government assistance, analysts. A new round of stimulus spending is not in the cards, the Fed has already reduced interest rates near zero and has said it will end its program for the purchase of annex binding later this month.
With the price of gasoline high crimp spending of consumers and businesses still reluctant to hire, investors may have to settle for a scholarship and an economic recovery that painfully slowly.
"The market is clearly used the uneven economic data," said Jeff Kleintop, chief strategist of market to LPL Financial. "We have moved from a phase of recovery at a more modest rate of economic growth."
A weak employment report stimulated other stock sell-off Friday, two days after the Dow Jones industrial average had its worst drop in a year. The Dow Jones index lost 97.29 points, or 0.8 percent, to close at 12,151.26.
The standard & poor 500 index has dropped from 12.78, or 1%, to 1,300.16. The Nasdaq composite fell to 40.53, or 1.5%, to 2,732.78.
Each index lost 2.3% for the week. The last time there was a decrease longer in the S & P 500, the most widely used market benchmark, took place in the six weeks ending July 11, 2008, before the worst of the financial crisis days.
Despite the recent decline of the market, analysts say there are bright spots in the economy, including business expenses and bank loans. The market could handle again to fight over this year, Kleintop said, but ascent here is probably a long and slow. Imagine a Valley jagged dips and actions, not a right kick upwards or downwards.
Investors will probably have to scale back their expectations for profits, as economists of JPMorgan Chase, Goldman Sachs and other banks recently lowered their estimates for economic growth. Kleintop expects to see the companies cut their earnings estimates in the coming weeks. The news is sure to push lower inventories. "There are several days as (Friday)," Kleintop said.
Stocks had a strong start of the year, reaching their highest level in nearly three years at the end of April. But the market has been sputtering since then as troubling signs appeared on the economy. Investors probably reacted to the incomes of large companies earlier this year, said Andrew Wilkinson, Interactive brokers with senior market analyst.
"I think what investors need to do is get used to a slower pace of growth,"said Wilkinson."."
Employers added only 54 000 new workers in may, a minimum of eight months and well below what analysts expected, said the Ministry of labour. Private companies hired the smallest number of new workers in a year. The unemployment rate increased by 9.1% to 9%.
Stocks dropped sharply after the opening of trade but recovered ground after a report of the Institute of supply management is out at Sunrise. The Group of purchasing executives said the economy service sector grew up in may for an 18th straight month. The pace of growth picked up slightly in the April ISM report, which was the worst in eight months.
Later in the morning, EU officials said that Greece would receive the next episode of its package ready for emergency, thrown some uncertainties on the financial crisis of the Greece. European stocks and the euro rose after the European Union, European Central Bank and Monetary Fund International gave the Greece more space to breathe that he tries to service the debt.
Monthly jobs report from the Department of the closely supervised work reinforced signals earlier that the slowing U.S. economy. High gas and food prices have cut into consumer spending and the earthquake and the tsunami in the Japan disaster made evil American manufacturers by slowing industrial parts supplies.
The Dow Jones index plunged 280 points Wednesday, its worst fall close to a year, on a low payroll ADP report and the largest decline in an index of manufacturing key since 1984. Combined with other low readings on the economy has prompted analysts to lower their projections of growth in 2011.
"We clearly see a significant slowdown in economic activity, and lots of dealing with the effect of rising energy prices and the disruption of the Japan, explains David Kelly, Chief Strategist with funds from J.P. Morgan market."
Increase in pessimism about the health of the economy have some investors hoping that the Federal Reserve will be drum until other rescue plan. Effort to buy bonds of Fed's current $ 600 billion was credited with fueling month of gains on the stock market since last August. This program, called EQ 2, ends this month. If signs of slower economic growth will trigger an EQ 3?
Most economists doubt.
"EQ 3 is not on the table," said Anthony Chan, Chief Economist of the unit of J.P. Morgan's private fortune. The economy is not in as bad shape as it was last summer when the Fed hatched his bond purchase plan, said Chan. At the time, many worried about a recession, and low inflation had the Fed fear a downward spiral of prices known as deflation, a scourge of the great depression.
Now, rising gas prices have pinched consumer spending and have been blamed for the weak retail sales. The price index fell 3.2% last year.
Newell Rubbermaid Inc. shares fell 12% after the company lowered its forecast of sales and revenue in 2011. Major retailers that sell products of the company are lowering their expectations for economic growth this year.
"Softness in the US economy and the increase in inflationary pressures have caused to revise our Outlook for the rest of the year," President and CEO Mark Ketchum said in a statement. "Our revised expectations are low that they were just was not that long."
More than two stocks fell for all those which have increased in the New York Stock Exchange. Trading volume was $ 3.6 billion shares.
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