US stocks pummeled by bleak jobs data

NEW YORK—US stocks closed more than two percent lower on Friday after a disappointing report on the labor market showed that job creation ground to a halt in August.

The Dow Jones Industrial Average was down 253.31 points (2.20 percent) to 11,240.26 in closing trade.

The broader S&P 500 fell 30.45 points (2.53 percent) to 1,173.97, while the tech-heavy Nasdaq Composite dropped 65.71 points (2.58 percent) to close at 2,480.33.

Stocks dived after the highly awaited US non-farm payrolls report revealed that the US economy created no jobs in August, leaving the unemployment rate at a stubbornly high 9.1 percent.

“The fact that there was absolutely no job growth last month is spooking the market,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

Financial stocks took a severe pounding after The New York Times reported that US authorities would sue more than a dozen big banks over their peddling of mortgage-backed securities prior to the 2008 financial crisis.

Bank of America plummeted 8.3 percent, JPMorgan Chase fell 4.6 percent and Goldman Sachs dropped 4.6 percent after they were named as targets in the upcoming raft of lawsuits by the Federal Housing Finance Agency.

Hewlett-Packard was the worst performer among blue-chip stocks outside of banking, with its shares falling 5.2 percent.

The tech giant has been beset by investor doubts in recent weeks after it announced a broad strategic restructuring, including the spin-off of its PC business.

Netflix plunged 8.6 percent after Starz Entertainment said it would not renew its contract with the online video service.

Bond prices surged. The yield on the 10-year Treasury note fell to 2.00 percent from 2.15 percent late Thursday, while that on the 30-year bond dropped to 3.31 percent from 3.51 percent.

Bond prices and yields move in opposite directions.