×

Futures Sink After Disappointing Jobs News

Stock index futures tumbled after news that job growth in May was far less than estimates that had been revised down already after a spate of weak economic news.

Nonfarm payrolls rose only 54,000 in May, the smallest increase for jobs since September 2010, the Labor Department reported. The unemployment rate rose to 9.1 percent.

Analysts surveyed by Thomson Reuters had expected 150,000 jobs were added in May after a gain of 244,000 jobs in April, an 11-month high.

The analysts had lowered their estimate from 180,000 after a very weak ADP private employment report on Wednesday. The unemployment rate was expected to fall to 8.9 percent.

Private payrolls gained 83,000, while government payrolls fell 29,000, the government said.

Following a string of disappointing economic numbers this week, further weakness Friday could raise the question of a double dip recession.

The news immediately brought to mind whether the Federal Reserve should consider a third round of monetary stimulus, which the market has dubbed "QE3".

"Arguing about the merits of whether QE3 would be a good idea, is irresponsible right now," said Todd Schoenberger, managing director at LandColt Trading. "It would be proactive for the FOMC to discuss, and develop a strategy for implementing QE3; because it's painfully clear the United States is headed for a very messy second half of 2011."

"We have to keep in mind, Washington/Central Bank tends to be reactive, so look for the volcano to erupt before those in charge on Constitution Avenue begin to move forward with more accommodation," Schoenberger said. "Hesitation, sadly, will improve the prospects for a double-dip in 2012."

In stocks news, Wal-Mart holds its annual shareholders meeting, with investors expected to focus on when domestic sales for the group will recover and how high gas prices will impact its profits.

Chevron slipped after news of an explosion at its oil refineryin southwest Wales that killed four and seriously injured one.

Orexigen Therapeutics plunged after news the Food and Drug Administration would not approve the drug Contrave, an obesity drug. The FDA wants the company to conduct a heart safety study first.

The dollar fell against a basket of currencies after the disappointing jobs report.

President Barack Obama spends Friday at a Chrysler plant in Toledo, Ohio, where he is expected to trumpet a saved auto industry and rehiring.

The automaker paid back its government loans last week and Fiat is reportedly close to signing an agreement to buy Treasury's remaining 6 percent stake in Chrysler.

In Europe, shares extended lossesafter the U.S. jobs report, while traders in Asiawere bracing for policy tightening for China over the weekend.

More on CNBC.com