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Stocks, dollar sink after weak jobs report suggests slowdown

The New York Stock Exchange on Wall Street

The New York Stock Exchange on Wall Street on July 15, 2013. Credit: AP / Mark Lennihan

A weak report on the U.S. jobs market sent the stock market sharply lower early Friday. U.S. employers cut back sharply on hiring in September and added fewer jobs in July and August than previously thought.

The news shot government bond prices up, drove the dollar down and rattled stock markets in Europe.

KEEPING SCORE: The Standard & Poor's 500 index lost 24 points, or 1.3 percent, to 1,899, as of 10 a.m. Friday on Wall Street. The Dow Jones industrial average dropped 218 points, or 1.3 percent, to 16,054, while the Nasdaq composite declined 61 points, or 1.3 percent, to 4,566.

WAY OFF: The government reported that employers added 142,000 workers last month, much lower than the 200,000 anticipated on Wall Street. The unemployment rate stayed at 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The report raised doubts that the Federal Reserve will start raising interest rates this year.

IMMEDIATE RESPONSE: "We see almost no way the Fed can raise rates at its October meeting," said Dan Greenhaus, chief strategist at the brokerage BTIG in New York, in a note to clients. "As a result of this report, investors should rightly be debating whether the Fed can or should raise rates at its December meeting."

OTHER SIDE OF ATLANTIC: In Europe, major indexes lost their earlier gains and turned into the red. Germany's DAX fell 1.1 percent, while France's CAC-40 fell 0.9 percent. Britain's FTSE 100 slipped 0.3 percent.

CRUDE: Benchmark U.S. crude oil dropped 43 cents to $44.29 a barrel on the New York Mercantile Exchange. Brent Crude, a benchmark for international oils, fell 57 cents to $47.81 in London.

BONDS AND DOLLARS: U.S. government bond prices jumped, driving the yield on the 10-year down to 1.92 percent, its lowest level since April. The yield was trading at 2.04 percent late Thursday. The euro rose 1 percent to $1.1310 and the dollar fell 0.9 percent to 118.78 yen.

ASIA'S SCORECARD: Markets in the region drifted, with Japan's Nikkei 225 rising less than 0.1 percent. South Korea's Kospi slipped 0.5 percent. Hong Kong's Hang Seng rebounded after a holiday, jumping 3.2 percent. Australia's S&P/ASX 200 lost 1.2 percent to 5,052.00. Markets on mainland China remain closed for holidays until Oct. 8.

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