Wall St drops 1 pct at open on dismal payrolls data

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks dropped more than 1 percent at the open Friday after a dismal report on the labor market appeared to confirm recent data signaling the economic recovery was weakening.

U.S. employment rose by 54,000 in May, far less than expected, to record its weakest reading since September, while the jobless rate rose to 9.1 percent.

“It goes right in line we’ve been every other report we’ve been getting for the last two months. In one sense, you shouldn’t be that surprised it’s a weak number. I’m just surprised that it is as weak as it is. 54,000 jobs is a really weak number, 54,000 is off the cliff,” said Ken Polcari, managing director at ICAP Equities in New York.

“If they can’t get us back above 1,305 (for the S&P) and hold it there, then 1,280 becomes much more of a reality.”

After closing at its highest level since June 2008 on April 29, the S&P 500 has dropped 4.8 percent.

The Dow Jones industrial average dropped 126.24 points, or 1.03 percent, to 12,122.31. The Standard & Poor’s 500 Index slid 14.13 points, or 1.08 percent, to 1,298.81. The Nasdaq Composite Index fell 29.49 points, or 1.06 percent, to 2,743.82.

Other data set for release include May’s U.S. ISM non-manufacturing index at 10 a.m. EDT , which is likely to provide further evidence on the pace of recovery in the world’s largest economy. Economists looked for a reading of 54 versus the prior month’s 52.8.

Recent economic data, such as regional manufacturing data, has pointed to a slowing economy, although some analysts believe the data indicates the recovery has hit a soft patch.

Newell Rubbermaid Inc had the biggest percentage drop on the benchmark S&P 500, down 11.8 percent to $14.96 after the storage container maker cut its earnings and sales forecast for the year, and said second-quarter results will fall short of estimates. (Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)