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NEW YORK — A disappointing jobs report sent investors out of stocks and the dollar Friday and into assets perceived as being safer. Foreign currencies and gold rose, as did bond prices, which sent interest rates lower. The yield on the two-year Treasury note hit a record low.
Stocks sank for most of the day but pared their losses in late afternoon trading.
A closely watched monthly employment survey from the Labor Department confirmed what investors have been fearing: The U.S. economic recovery is weakening. Private job growth was just 71,000 in July. That’s below what analysts had hoped for and far shy of the level that would be needed to reduce the unemployment rate, which remained steady at 9.5 percent.
It was latest sign that a slowdown in U.S. growth is the real problem with the global economy, not the European debt crisis that had financial markets in a tizzy for much of the spring.
It’s not yet clear whether the pullback Friday means that investors will be ducking and covering for the foreseeable future. However with corporate earnings season nearly over, the market’s focus is turning back to the broader U.S. economy. There have been several troubling signs of weakness: recent reports on housing, retail sales and income and spending have all been downbeat.
“The tension will play out for the rest of the year between corporate earnings and employment,” said Sarah Hunt, a research analyst at Alpine Funds. At some point, Hunt said, earnings will have to slow to match the weaker economy or employment will have to pick up to help maintain strong earnings.
On top of that, Europe’s economy is showing stronger signs of life than was expected just a few months ago, when mounting government debt there was hurting stocks worldwide. A healthier Europe gives investors another place to stash money if the U.S. economy remains weak.
The euro has recovered nearly all of its losses from the worries over European government debt that flared up earlier this year.