The surge in unemployment to the highest level in 16 years has fueled investor fears of a deepening recession in the U.S. economy, leading to a sharp decline in stock prices on Wall Street.
The Dow Jones index fell by 143 points or 1.64 percent, to 8,599 points, while the S&P 500 index plummeted by 2.13 percent, to 890 points. The Nasdaq index lost 2.81 percent, diving to 1,571 points.
In December of last year, 524,000 workers were left unemployed in the U.S., and throughout the past year, 2.6 million jobs were lost, marking the largest annual decline in employment since World War II. The unemployment rate reached 7.2 percent in December, the highest level in 16 years. Although slightly fewer layoffs were recorded in the last month of the previous year than the expected 550,000, this did not encourage investors. This is especially true as Boeing announced the layoff of 4,500 workers due to a decline in demand for airplanes.
"Bad news continues to arrive from the real estate and labor markets. Although the situation in the credit market is slowly improving, consumption is weak, and the U.S. economy is still a very sick patient. Investors are very concerned ahead of the earnings season for companies," says Kevin Kruszenski, director at KeyBanc Capital Markets. Investors were also unsettled by Chevron’s warning about the negative impact of falling energy prices on its business results. As a result, the stock price of the second-largest U.S. oil company fell by 1.9 percent, and the stock of competitor Exxon Mobil dropped by the same amount.
