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US Jobs, Small Europe Markets Sliding

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

US stocks lost most of their gains Friday from their past two days as a weakening Euro and a poor U.S. jobs report are weighing on futures.

S&P futures dropped about 6-7 points around 7:00am ET this morning as the euro fell through key support levels vs. the U.S. dollar and Swiss franc. The euro broke below the key CHF 1.40 level, to an all-time low vs. the Swiss franc, and fell below $1.21, to its lowest levels vs. the U.S. dollar since March 2006. Futures continued to drift lower up until the release of the jobs reports.

At 8:30am ET, futures immediately doubled their losses after a terrible May non-farm payrolls report was released. The headline number of an addition of 431,000 jobs last month was below the consensus forecast of 500,000, and even further below a number of estimates for upwards of 600,000 jobs. Only 41,000 private jobs were created in May, down significantly from 218,000 jobs the prior month.

Much of the jobs gains in May were from government hiring for temporary Census Bureau jobs.

As a result, European stocks are also at their session lows, with the major markets (U.K., France, Germany) down 1.5 percent to 3 percent today.

However, many of the smaller European markets are seeing even steeper declines. Hungary is plunging 8 percent on the day after the Prime Minister’s spokesperson said there was some risk of Greek-style crisis debt crisis occurring in that country. Markets in Greece, Spain, Italy, Austria and the Czech Republic are also dropping 3 percent to 5 percent.

Financials and commodity stocks are all 2 percent to 4 percent lower in pre-market trading.

Elsewhere:

1) U.S. Steel falls 3% after being removed from Goldman Sachs’ Conviction Buy List. The broker keeps the steelmaker on its buy list, but notes European debt concerns, Chinese growth, and the oil spill in the Gulf could negatively affect near-term investor sentiment on the steelmaker.

2) Traffic at AMR and Delta Air Lines was up last month fueled by strong international travel. AMR saw a 4.1 percent rise in total traffic and Delta reported a 2.7 percent rise in worldwide traffic as both flew fuller planes. Traffic along the airlines’ international routes jumped 8.8 percent for AMR and 6.7 percent for Delta.

3) Wal-Mart is currently holding its annual shareholder meeting today. The stock has severely underperformed the S&P Retail index (.RLX) over the past year rising just 0.6 percent vs. the .RLX’s 33 percent gain.

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