Futures tumbled sharply Friday after employment rose far less than expected, shattering hopes that the economy was starting to regain momentum after a soft patch in the first half of the year.
Nonfarm payrolls rose only 18,000, the weakest reading since September, according to the Labor Department, well below economists' expectations for a 90,000 rise from a Reuters survey. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.
Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and expected gains of anywhere between 125,000 and 175,000.
The government revised April and May payrolls to show 44,000 fewer jobs created than previously reported. The private sector added 57,000, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments.
President Obama is expected to speak on the jobs report at 10:35 am ET. (CNBC.com will stream the event live.)
"This number is horribly disappointing and ridiculously bad!" said Todd Schoenberger, managing director of LandColt Trading. "The monthly jobs figure continues to frustrate Americans and the short-term outlook appears to be dire considering there is no credible plan for job creation presented by the administration."
"Today, risk is off for investors and could very well remain that way into the fall," Schoenberger added.
“[The numbers are] certainly disappointing, but it’s not the end of the world,” said Scott Brown, chief economist at Raymond James. “It’s still evidence of a slow patch, but the economic news we had from retail sales and manufacturing suggest that things will improve a bit into the second half.”
The Commerce Department releases wholesale inventories for May at 10 am ET. Economists polled by Reuters forecast May inventories to rise 0.7 percent versus a 0.8 percent increase in April.
Among retailers, Citigroup cut its price target on Target to $61 from $64 and JCPenney from $45 to $41, but boosted its rating on TJX to "hold" from "sell" and price target to $56 from $46.
Caterpillar is among stocks to watch after the company said China's regulator had approved its acquisition of mining equipment firm Bucyrus International.
Talks to raise the debt ceiling continue after Obama told lawmakers on Thursday he would not sign a short-term extension and said negotiators would work through the weekend on a deal to avoid a debt default, Reuters reported.
On Tap This Week:
FRIDAY: Wholesale trade, consumer credit
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