Oil falls to US$83, Dow nosedives on bad jobs report
Oil prices plunged as bleak reports on US job growth and manufacturing heightened worries about a slowing global economy.
Benchmark oil fell US$3.49 to US$83.04 per barrel Friday in New York after earlier dropping to US$82.56 per barrel.
Brent crude lost US$3.49, or 3.4 per cent, to US$98.32 per barrel, its lowest price since February 2011.
The reports on jobs and manufacturing are the latest signals that the US economy is growing more slowly. At the same time, Europe is embedded in a financial crisis and China's government is working to prevent economic growth there from slowing too quickly. That's led to rising concerns that oil demand may weaken in the months ahead.
US employers added 69,000 jobs in May, the government said, which is the smallest number in a year and far short of the 158,000 new jobs expected by economists. The unemployment rate rose to 8.2 per cent from 8.1 per cent in April.
Alarmed by an ominously weak jobs report, investors ran for safety Friday, sending the Dow Jones industrial average into a 275-point dive, the index's biggest loss since last November.
The broad sell-off wiped out the last of the index's gains for the year.
Across Wall Street, fearful investors snapped up safer investments such as bonds, dragging the yield on the benchmark 10-year Treasury note to a record low. Gold spiked US$50 an ounce, and oil fell to its lowest since October.
"The big worry now is that this economic slowdown is widening and accelerating," said Sam Stovall, chief equity strategist at S&P Capital IQ, a market research firm.
Dow, S&P 500, Nasdaq down
The Dow closed down 2.2 per cent, at 12,118.57 - off 0.8 per cent for the year.
The Standard & Poor's 500 index fell 32.29 points, or 2.5 per cent, to 1,278.04; the Nasdaq dropped 79.86, or 2.8 per cent, to 2,747.48.
Both indexes are still up for the year - 1.6 per cent for the S&P 500 and 5.5 per cent for the Nasdaq.
The Nasdaq has dropped more than 10 per cent since its peak - what traders call a market correction. The S&P 500 is just a point above correction territory.
The yield on the benchmark 10-year US Treasury note briefly fell to 1.44 per cent, the lowest on record. It ended the day at 1.46 per cent. Gold for August delivery climbed US$57.90, nearly 4 per cent, to US$1,622.10 per ounce.
"Everybody's looking for a safe haven," said Adam Patti, CEO of IndexIQ, an asset management firm. He's sceptical of that strategy, believing the swing was driven by short-term traders "looking to flip in and out of things," rather than long-term investors willing to ride out a few bumps in the market.