Sept. 2 - Wall Street lost more than 2 percent after the lack of job creation in August and a lawsuit against banks over subprime mortgages raised investor fears of another possible recession. Conway G. Gittens reports.
Wall Street suffered its biggest losses in two-weeks as investors found little place to hide from a rash of negative news. The most damaging was the August jobs report. The U.S. economy added no jobs and the unemployment rate stayed at 9.1 percent, with employers paralyzed by Washington's debt debate, a hurricane, and Europe's debt troubles. The shocking report comes on the eve of President Barack Obama's much talked-about jobs speech. Tony Crescenzi is a market strategist and portfolio manager at PIMCO. SOUNDBITE: TONY CRESCENZI, MARKET STRATEGIST/PORTFOLIO MANAGER, PIMCO (ENGLISH) SAYING: "There are two million construction workers who were let go in the crisis and they can't easily get their jobs back because of the problems in the housing market - there won't be any meaningful construction for a long time, so perhaps there will be programs announced to get many of these workers employed." But an anemic labor market wasn't Wall Street's only worry. A U.S. regulator is going after big lenders like Bank of America, JP Morgan and Citigroup. The Federal Housing Finance Agency is suing the banks, accusing them of selling investments backed by bad mortgages, which ultimately led to the recent financial crisis. The lawsuit will no doubt add billions of dollars in legal costs. And there's even more concern about Bank of America. Regulators asked the No. 1 U.S. bank for a contingency plan in case business conditions worsen, according to the Wall Street Journal. Looking at the final numbers: stocks were down more than 2 percent, with every Dow component down for the day. For the week: blue chips settled with a small loss, the Nasdaq was unchanged. European markets caught the shivers from the jobs report too - stocks there were down between 2 and 3 percent. Conway Gittens, Reuters