Published: September 05, 2008 07:08 am         

US stocks look to extend losses ahead of job data

NEW YORK — Wall Street looked to extend its losses on Friday, with investors worried that the government’s August jobs report will show that the economy is in recession.

Investors are awaiting data from the Labor Department that is expected to show the economy lost jobs for the eighth month in a row and that the unemployment rate moved higher. Employers likely cut payrolls by around 75,000 in August, even deeper than the 51,000 eliminated in July, according to economists surveyed by Thomson/IFR.

The economy has lost a total of 463,000 jobs so far this year, and further drops in payrolls would further erode investors’ hopes for a late-year recovery. The report, considered one of the most important economic readings of the month, will be released at 8:30 a.m. EDT.

Meanwhile, a downgrade of Merrill Lynch & Co. compounded skittishness ahead of the jobs report. Goldman Sachs analyst William Tanona cut the nation’s largest brokerage to a “sell” rating on expectations it will incur fresh write-downs on top of the $5.7 billion it announced in late July.

Stocks turned in a dismal performance on Thursday, with all three major indexes moving back into bear market territory, defined as a 20 percent drop from a recent peak. The Dow Jones industrials plunged more than 340 points in a sell-off underpinned by disappointing economic news and lackluster sales reports from retailers.

Dow Jones industrial average futures fell 63, or 0.49 percent, to 11,137. Standard & Poor’s 500 index futures shed 7.30, or 0.59 percent, to 1,229.30 and Nasdaq 100 index futures dropped 8.00, or 0.45 percent, to 1,767.75.

With concerns about the economy and more problems in the financial sector, investors again moved into the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.60 percent from 3.62 percent late Thursday.

And the gloom about the U.S. economy was not contained to just major American indexes. Investors overseas sent shares sharply lower on concerns about America’s impact on global growth.

Japan’s Nikkei stock closed down 2.75 percent. In afternoon trading in Europe, Britain’s FTSE 100 fell 1.38 percent, Germany’s DAX index dropped 1.64 percent, and France’s CAC-40 shed 1.23 percent.

Wall Street again took no comfort from falling oil prices, with crude dropping below $107 a barrel Friday as the dollar continued to gain on the euro and investors waited to see if OPEC moves to restrict output next week amid a two-month plunge in prices. The Organization of the Petroleum Exporting Countries is scheduled to meet early next week in Vienna and has indicated it may take action to defend the $100-a-barrel level.

A barrel of light sweet crude tumbled $1.39 to $106.50 a barrel in electronic trading on the New York Mercantile Exchange.