Wall Street: Stocks, dollar fall sharply but bond prices surge

Wall Street plunged while bonds surged higher Friday after the government reported payrolls in August fell for the first time in four years rather than rising as had been expected. The Dow Jones industrial average fell nearly 250 points.

Investors were taken aback by the Labor Department’s report that payrolls dropped by 4,000 in August, the first decline since August 2003. Economists had forecast payrolls would increase by 110,000. However, the unemployment rate held steady at 4.6 percent as expected.

The Dow fell 249.97, or 1.87 percent, to 13,113.38.

Broader stock indicators also skidded. The Standard & Poor’s 500 index fell 25.00, or 1.69 percent, to 1,453.55, and the Nasdaq composite index fell 48.62, or 1.86 percent, to 2,565.70.

The three major indexes, though still in positive territory for the year, all finished the week down more than 1 percent.

The Dow Jones Wilshire 5000 Composite Index — a free-float weighted index that measures 5,000 U.S. based companies — ended Friday at 14,655.52, down 192.18, or 1.29 percent, for the week. A year ago, the index was at 12,948.96.

Bonds, meanwhile, soared following the jobs report as investors sought safety. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, skidded to 4.37 percent from 4.51 percent late Thursday.

The dollar fell sharply following the report, as the likelihood of an interest rate cut appeared to increase. Dollar-based assets would earn less interest if the Fed were to cut rates. In addition, gold prices rose sharply because some investors would be expected to abandon a weakening dollar and move into gold if the central bank lowers rates.

Light, sweet crude rose 40 cents to $76.70 a barrel on the New York Mercantile Exchange