Dow Plunges More Than 150 Points After Disappointing Payroll Data

The Dow plunged more than 150 points at the start of trading Friday after investors learned the number of new jobs created by private companies grew at the slowest pace since the start of the year.

The Dow Jones industrial average plummeted 158.10 points, or 1.54 percent, to 10,097.18. The S&P 500 fell 18.37 points, or 1.67 percent, to 1,084.46. The NASDAQ fell 40.28 points, or 1.75 percent, to 2,262.75.

The Labor Department’s new employment snapshot released Friday suggested that employers are wary of increasing their work forces despite a decline in the unemployment rate to 9.7 percent. The decrease was largely influenced by a wave of temporary census hiring and an increase in the number of people giving up searching for work.

Virtually all the job creation in May came from the hiring of 411,000 census workers. Private employers added just 41,000 jobs in May after 218,000 new positions were created in April.

Counting people who have given up looking for work and part-timers who would rather be working full time, the “underemployment” rate fell to 16.6 percent in May from 17.1 percent in April.

Interest Rates: Key interest rates controlled by the Fed could soon start rising. Three top Federal Reserve officials said Thursday that it may soon be time to begin raising interest rates as the economic recovery in the United States gathers momentum.

Thomas Hoenig, president of the Kansas City Fed, argued the U.S. central bank should raise benchmark borrowing costs from near zero to 1 percent by the end of summer. The head of the Atlanta Fed, Dennis Lockhart, said policymakers should soon begin thinking about tightening monetary policy. Dallas Fed President Richard Fisher said that while economic conditions do not call for tightening, “we need to be ready and we need to be ready to move fairly quickly.”

The Fed slashed interest rates effectively to zero and launched a host of emergency measures in 2008 in an effort to slow inflation and increase economic activity.

G20: Leading policymakers were unusually candid on Friday in voicing fears that the euro zone’s financial and banking woes could derail the global economic recovery.

“It is essential to ensure continued recovery that Europe fix its banks. It is essential that certain vulnerable European nations follow through with major fiscal consolidation, and get the job done,” Canadian Finance Minister Jim Flaherty told reporters in Busan, South Korea.

U.S. Treasury Secretary Timothy Geithner sounded a more optimistic note.

“The world economy came into this period of concern about Europe with stronger underlying momentum and growth than many people expected, and we’re in a much stronger position to get through this,” Geithner told CNBC television en route to Busan.

Geithner added that the G20 shared a commitment on the need for common standards across global financial markets that will constrain some of the risk-taking that helped fuel financial meltdown through 2007 and 2008.

World Markets: European and Asian shared tumbled as economic uncertainty surrounded Hungary. Spokesman Peter Szijjarto said the new government was committed to prevent a Greece-like crisis, but claimed Hungary was in a severe situation.

There is nobody in the country apart from the previous government who still says the budget deficit of 3.8% of gross domestic product can be reached,” said Szijjarto.

Hungary joined the European Union in 2004 but does not use the euro currency.

The CAC 40 in France was poised to lose 2.34 percent while the FTSE 100 in Britain and Germany’s DAX fell more than one-and-a-half percent. The Nikkei in Japan and Hong Kong’s Hang Seng fell a fraction of a percent.

Currencies & Commodities: The euro plunged 2.59 percent as the dollar leaped to $1.2267. The greenback made smaller gains against the British pound while falling versus the Japanese yen and Chinese yuan.

The price of oil dipped $1.54 a barrel to $73.07 for July delivery as oil prices continued a month-long decline. Gold prices fell $2.40 an ounce to $1,205.90 on the New York Mercantile Exchange. The price of gold has gained 2.91 percent over the last month.