Stocks sink as job losses rise more than expected

Investors retreated further from stocks Friday as the pile of disappointing economic reports grew larger.

A modest slide left stocks lower for a second week, the first set of consecutive weekly drops since July. The Dow Jones industrial average fell for a fourth day, losing 22 points one day after sliding 203.

The decline Friday came as the government said employers cut more jobs than economists had expected in September and that orders at factories fell. The data added to concerns that the economy’s recovery could be further off than had been hoped.

The Labor Department surprised investors with its report that employers shed 263,000 jobs last month. The cuts went beyond the 201,000 jobs lost in August and were far larger than the 180,000 economists had expected on average. The unemployment rate ticked up to 9.8% from 9.7% as forecast.

The report often has been the most anticipated piece of economic news each month because an eventual drop in unemployment is key to a sustained recovery.

“There’s been a lot of talk particularly in the last couple of months that we’re seeing a turnaround in unemployment, and obviously that’s not the case,” said Dan Cook, senior market analyst at IG Markets in Chicago.

Meanwhile, the surprise 0.8% drop in factory orders in August joined other lackluster economic data released in the last two weeks.

With nerves running high, stocks have fallen in seven of the last eight days. The Dow has lost about 4.3% since coming within 82 points of the 10,000 level on Sept. 23.

Bruce Shalett, managing partner at Wynston Hill Capital in New York, said the jobs report was “a reminder that while things are not as dire as they were a year ago, we still have a lot of work to do.”

Many found the relatively calm response to the jobs report encouraging, taking it as a sign there are still investors willing to use the dips to pick up stocks they consider cheap.

“Pullbacks are going to constantly be used as opportunities to get into the market,” said Hank Smith, equity chief investment officer at Haverford Investments in Radnor, Pa.

Some of Thursday’s slide may have been the result of investors’ making bets that the employment number would indeed be bad. That would explain Friday’s muted selling.

The Dow fell 21.61 points, or 0.2%, to 9,487.67, its lowest close since Sept. 4. The index was down as much as 79 points early in the session.

The broader Standard & Poor’s 500 index fell 4.64 points, or 0.5%, to 1,025.21, and the Nasdaq composite index fell 9.37 points, or 0.5%, to 2,048.11.

The Russell 2,000 index of smaller companies fell dropped 0.6%.

Two stocks fell for every one that rose on the New York Stock Exchange.

For the week, the Dow fell 1.8%, the S&P; 500 index lost 1.8%, the Nasdaq slumped 2% and the Russell 2,000 sank 3.1%.

Stocks are coming off a robust third quarter. Both the Dow and the S&P; 500 index gained 15% in the July-to-September period. It was the Dow’s best quarter since 1998.

The fourth quarter may not be as stellar. Some analysts predict that the market will drift in the next few weeks as investors await companies’ earnings reports and their forecasts for the coming months. The last big pullback in the market came in the weeks before second-quarter earnings were announced in July.

“October is shaping up to be a challenging month for investors,” said Brent McQuiston, a vice president at WealthTrust-Arizona.

Despite the weak jobs report, yields on Treasury bonds rose from their lowest levels since the spring. The benchmark 10-year T-note rose to 3.21% from 3.19% late Thursday.