* U.S. economy adds 80,000 jobs in June, less than expected
* Pressure grows on Fed to act
* Stocks deepen losses after data, commodities fall too
* Dollar rises in broad risk flight as euro hit 5-week low
* U.S. Treasury, German bund prices up in safe-haven bid
By Barani Krishnan
NEW YORK, July 6 Stocks on major exchanges fell
on Friday and the euro hit 5-week lows after U.S. jobs data for
June came in weaker than expected, fueling concerns that
Europe's debt crisis is deepening a slowdown in the U.S.
Expectations rose that the Federal Reserve would have to
resort to more monetary easing to revive U.S. growth. But that
did not stop the dollar from surging amid the flight from risk.
Oil and copper prices fell, along with gold. U.S. and German
government bond prices leapt, with investors seeking safe havens
in U.S. Treasuries and German bunds.
The Labor Department said U.S. nonfarm payrolls expanded by
just 80,000 jobs in June, falling short of forecasts. A Reuters
poll showed the market expected 90,000 additional jobs.
"People were looking for something better, some indicator
that may show we're crawling out of this trough," said Nigel
Gault, chief U.S. economist at IHS Global Insight. "But
everything here says we're still in it."
The data raised pressure on the Fed to launch a third round
of quantitative easing. The first two rounds involved
large-scale Treasuries buying, aimed at lowering long-term
"After this, we can expect some Fed action at their next
meeting, said Tim Ghriskey, chief investment officer of Solaris
Group in Bedford Hills, New York. "There is the anticipation but
at the same time, we know that the Fed is running out of
The next meeting of the Federal Reserve's monetary policy
committee is scheduled for July 31-Aug. 1.
Futures traders added to bets that the Fed will keep
short-term interest rates near zero until the end of 2014.
Fed fund futures, tied to the overnight lending rate between
banks, ticked up after the jobs report, signaling that traders
see the Fed first hiking rates in the fourth quarter of 2014,
either at its October or its December meeting.
Two hours after the open, the Dow Jones industrial average
was down 178.99 points, or 1.39 percent, at 12,717.68.
The Standard & Poor's 500 Index was down 17.34 points, or
1.27 percent, at 1,350.24. The Nasdaq Composite Index
was down 47.11 points, or 1.58 percent, at 2,929.01.
European shares fell further after the jobs data,
down 1.0 percent on the day, having been 0.2 percent lower
beforehand. World stocks fell 1.2 percent.
The euro extended losses to a five-week low against the
dollar, sliding nearly 0.8 percent to $1.2298 after falling as
low as $1.2295.
Monetary policy loosening on Thursday by a trio of major
central banks failed to impress investors on Friday. They pushed
Spanish borrowing costs back up to unsustainable levels reached
before last week's EU summit took measures designed to ease
pressure on Spain's debt.
China, the euro zone and Britain all loosened monetary
policy, signaling growing alarm about the world economy, but to
The 19-commodity Thomson Reuters-Jefferies CRB index
was headed for its sharpest loss in a week as oil
and copper prices fell more than 2 percent each.
Gold slid more than 1 percent in choppy trade as investors
turned to the perceived safety of the dollar. The spot price of
gold was at $1,585.24 per ounce, down from $1,604.33 at
Benchmark U.S. 10-year Treasury note yields were at 1.5457
percent, their lowest in four days, and safe-haven German Bund
futures hit a session high.