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Just ahead of the government’s monthly jobs report for May, investors got a disappointing look at the trend in hiring over the last few weeks. The monthly report from ADP Employer Services, the payroll processing firm, said that private employers added 38,000 jobs in May, lower than expectations and the smallest increase since September 2010.

Economists said that the figure in the ADP survey, far less than the 175,000 jobs that had been forecast, could have been a reflection of severe storms in many parts of the country that month, while automobile manufacturers have temporarily laid off workers in response to a disruption in supply chains. Economists from Capital Economics Ltd. said in a research note that the dip also reflected a slowdown in the growth in the service sector.

Worried investors are funneling their funds into bonds, a much safer investment vehicle, illustrating a lack of faith in the much-touted economic recovery.

Read the rest on The New York Times.

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Although the current recession has not been called a depression, some are already comparing President Obama’s stimulus success to that of Franklin Roosevelt during the great depression. Much like President Roosevelt, President Obama has taken the necessary measures to turn the economy around–and so far it’s working. Annual reports show the Dow Jones industrial average has risen over the last year under President Obama. Does this mean a full economic recovery is around the corner? We’ll just have to wait and see. -News One Staff

GALLERY: Vintage Oprah

From the Business Insider:

When Obama came into office, there was all sorts of handwringing about how his liberal policies would exacerbate the economic weakness, freak out investors, and tank the market. For the first few months it was dicey, but then things turned around. Big time.

Bespoke tabulates the first-year returns of the last several Presidents, and finds that Obama had the second best first-year return of the bunch. First place: FDR.

And we all know how the economy did for years after that.

Click here to read more.

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Paulson said the government’s $700 billion financial rescue package will not purchase troubled assets from banks as originally planned. He said that plan would have taken too much time, and that the Treasury instead will rely on buying stakes in banks and encouraging them to resume more normal lending.

While the market had been pleased by the government’s decision weeks ago to buy banks’ stock, investors still hoped to see the financial industry relieved of the burden of the mortgage assets whose decline in value helped set off the nation’s financial crisis.

Paulson also announced a new goal for the program to support financial markets which supply consumer credit in such areas as credit card debt, auto loans and student loans. He said “with a stronger capital base, our banks will be more confident” to support economic activity.

With the market also worried about sagging consumer spending, news from some of the nation’s biggest retailers also sent stocks falling. Macy’s Inc. said it lost $44 million in the third quarter as sales at the department store retailer fell more than 7 percent. Consumer electronics retailer Best Buy Co., meanwhile, slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.

Investors are worried that a severe pullback in consumer spending — which drives more than two-thirds of the U.S. economy — will prolong a global economic downturn.

In late morning trading, the Dow shed 274.39, or 3.16 percent, to 8,419.57.

The broader Standard & Poor’s 500 index dropped 29.49, or 3.28 percent, to 869.46, and the Nasdaq composite index stumbled 41.43, or 2.62 percent, to 1,539.47.

The Russell 2000 index of smaller companies fell 14.24, or 2.95 percent, to 468.05.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to a light 235.6 million shares.

Concerns about consumer spending contributed to the market’s declines on Monday and Tuesday.

Government bond prices, which did not trade Tuesday because of Veterans Day, moved higher as investors looked for safer investments. The three-month Treasury bill’s yield fell to 0.19 percent from 0.22 percent late Monday, and the yield on the benchmark 10-year Treasury note fell to 3.69 percent from 3.76 percent late Monday.

Lower yields indicate stronger demand.

Crude dropped below $57 a barrel Wednesday on the growing realization that global economic growth next year will slow more than originally feared, cutting demand for crude products such as gasoline. Light, sweet crude fell $1.42 to $56.91 a barrel on the New York Mercantile Exchange.

In corporate news, the future of the country’s top automakers remained a major concern on the Street. House Speaker Nancy Pelosi wants Congress to support a financial bailout for the troubled U.S. auto industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy.

President-elect Obama, when he met with President Bush at the White House on Monday, urged Bush to support aid for the auto industry, and Democrats in Congress have begun drafting legislation that would give General Motors, Ford and Chrysler access to $25 billion of the rescue funds.

American Express Co. is said to be seeking about $3.5 billion from the government to help boost its balance sheet, according to a report in The Wall Street Journal citing people familiar with the situation. AmEx, the No. 4 U.S. credit card issuer, won approval Monday from the Federal Reserve to become a bank holding company, which gives it the ability to grow a large deposit base and access financing from the Fed.

AmEx shares dropped $1.90, or 8.6 percent, to $20.49.

Prudential Financial Inc. said late Tuesday its 2008 annual dividend will be roughly half of what it paid out to shareholders last year. The insurer said it will pay a dividend of 58 cents per share on Dec. 19 to shareholders of record at the close of business on Nov. 24. Last year, the company paid a dividend of $1.15 per share.

Prudential shares slipped 14 cents to $27.47.

The dollar was mixed against other major currencies, while gold prices dipped.

Overseas, Japan‘s Nikkei closed down 1.29 percent and Hong Kong Hang Seng fell 0.73 percent. In European trading, London’s FTSE 100 fell 2.19 percent, Germany’s DAX fell 3.55 percent, and France‘s CAC-40 dropped 3.20 percent.

The market managed to briefly bounce off its lows of the day after a media report that a BlackRock executive said a $30 billion Bear Stearns mortgage portfolio
could be worth more than its market value suggests. And in another
promising sign for mortgages, the government and the mortgage industry
announced the largest moves yet to help homeowners renegotiate hundreds
of thousands of delinquent loans held by Fannie Mae and Freddie Mac.

But
the market sold off again in late afternoon, acknowledging that
although the mortgage crisis that spawned the current downturn is being
addressed, the economy remains extremely troubled.

It’s
becoming clear that it’s going to be hard to rely on the average
consumer to pull the economy out of its downturn. Late Monday, Starbucks Corp.
reported lower sales across the coffee chain, and early Tuesday, Toll
Brothers Inc. posted a sharp drop in revenue and said it was too
difficult to predict what the luxury homebuilder’s profit would be next
year.

Investors are also jittery as the
nation’s feeble automakers try to get a bailout from the federal
government, much like the ailing insurer American International Group Inc. has. General Motors Corp.,
whose shares have plunged to 60-year lows, said late Monday it would
cut 1,900 factory jobs on top of the 3,600 cuts it announced Friday.

There were no economic reports released Tuesday, since the government and bond markets
were closed for Veterans Day. But investors didn’t need government data
to see that the economy’s downward slide isn’t over — the litany of
troubling corporate news was enough. Wall Street has been anticipating grim results from corporate America, but it cannot gauge yet how bad they could get.

“We’re in a situation where we really don’t know how deep a recession we’re in,” said Jim Herrick, manager of equity trading
at Baird & Co. “Until there’s some clarity on the economy and
clarity with earnings, we’ll definitely be stuck in this trading range.”

Herrick
referred to the fact that the market has been giving back gains
recently — including a 248-point advance last Friday — as it tries to
recover from October’s heavy selling. In a similar fashion, the market
pared nearly all of its losses on the report that BlackRock President
Robert Kapito said a Bear Stearns mortgage portfolio is generating cash flow, but then quickly sank again.

In late afternoon trading, the Dow Jones industrial average
shed 212.34, or 2.39 percent, to 8,658.20 after falling by more than
300. The blue chip index has not dipped below the 8,000 mark in trading
since Oct. 10, but is down about 35 percent since the start of the year.

Broader stock indicators declined as well. The Standard & Poor’s 500 index fell 25.80, or 2.81 percent, to 893.41; and the Nasdaq composite index dropped 45.77, or 2.83 percent, to 1570.97.

The Russell 2000 index of smaller companies fell 9.48, or 1.92 percent, to 483.62.

The Dow Jones industrial average is down more than 500 points at the 8,800 level. Wall Street tumbled again today after a disappointing retail sales report offered fresh evidence that an intractable freeze in the credit markets since last month has caused cracks in the economy well beyond the banking sector.

In afternoon trading, the Dow Jones industrial average was down 509.50 to 8,801.40. Broader stock indicators also skidded. The Standard & Poor’s 500 index fell 56.81, or 5.69 percent, to 941.20, and the Nasdaq composite index fell 85.61, or 4.81 percent, to 1,693.40.

The government’s report that retail sales plunged in September by 1.2 percent — almost double the 0.7 percent drop analysts expected — made it clear that consumers are hesitating to reach for their wallets as they worry about a shaky economy and a punishing stock market.

The Commerce Department report is sobering because consumer spending accounts for more than two-thirds of U.S. economic activity. The reading comes as Wall Street is beginning to refocus its attention on the faltering economy following stepped up government efforts to revive the stagnant credit markets.

“Even though the banking sector may be returning to normal, the economy still isn’t. The economy continues to face a host of other problems,” said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. “We’re in for a tough ride.”

Federal Reserve Chairman Ben Bernanke offered a similar assessment, warning in a speech Wednesday that patching up the credit markets won’t provide an instantaneous jolt to the economy.

“Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away,” he said in prepared remarks to the Economic Club of New York.

Analysts have warned that the market will see continued volatility as it tries to recover from the devastating losses of the last month, including the nearly 2,400-point plunge in the Dow over eight sessions. Such turbulence is typical after a huge decline, but the market’s uneasiness about the economy will also be reflected in the gyrations expected in the weeks and months ahead.

Doubts about the economy were already surfacing in Tuesday’s session, when investors halted an early rally and began collecting profits from stocks’ big Monday advance. Wednesday’s data confirmed the market’s fears that the economy is likely to remain weak for some time, and that corporate profits are likely to suffer.

Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas, said moves by European and U.S. government officials to begin investing directly in banks are easing worries about credit. But the steep pullback in stocks that began last month after the credit markets lurched to a near standstill has now created worries that consumers will spend less after seeing the value of their retirement accounts and other investments drop.

“Markets abhor uncertainty and so we got a lot of that resolved this weekend and we got the reward Monday but now people are saying ‘OK, now what is the economy going to do?’”

“We’re definitely going to get a slowdown from the terror of going through that,” Coffelt said.

Investors were digesting the first wave of third-quarter earnings reports, including those of two banks caught up in the mortgage mess. JPMorgan Chase & Co. reported an 84 percent slide in its third-quarter profit, offering further evidence of how the financial crisis is slamming the economy.

JPMorgan, which bought the assets of failed bank Washington Mutual Inc. late last month as a result of the mortgage bust, said the profit drop reflected losses on bad mortgage investments, leveraged loans and home loans. The quarter’s performance beat expectations, however.

Wells Fargo & Co., meanwhile, reported that its third-quarter profit fell 23 percent after it took hits on investments in troubled finance companies and increased its credit reserves. Still, results topped expectations. Wells Fargo is in the process of acquiring stricken Wachovia Corp.; Wells Fargo and JPMorgan, despite their own troubles, are regarded as among the nation’s strongest banks.

If Wednesday’s decline holds, the Dow will, after a one-day break, resume a string of triple-digit losses or gains. On Tuesday, after swinging erratically throughout the session, the blue-chip index closed the day down a moderate 76 points.

The stock market is trying to recover from last week’s terrible run, which erased about $2.4 trillion in shareholder wealth and brought the Dow to its lowest level since April 2003. The tumble occurred amid a seize-up in lending stemming from a lack of trust among institutions in response to the bankruptcy of investment bank Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc., which had been the nation’s largest thrift.

The credit markets have been showing tentative signs of recovery, though they remain strained, and demand for safe assets remains high. The three-month Treasury bill on Wednesday was yielding 0.33 percent, up from 0.30 percent on Tuesday. Overall yields remain low, showing that demand is so high that investors are willing to earn meager returns as long as their principal is preserved.

In other economic data Wednesday, the Labor Department said the producer price index, which measures inflation pressures before they reach the consumer, fell 0.4 percent in September, driven by lower energy costs. That decline matched analysts’ expectations.

Late Tuesday, Intel Corp., the world’s largest maker of PC microprocessors, beat analysts’ estimates and posted a third-quarter profit increase of 12 percent. Intel rose 16 cents to $15.77.

JPMorgan’s results topped forecasts but the problems seen in all types of loans, not just home equity debt but also prime mortgages and credit cards, is worrisome for the banking industry. The stock rose 37 cents to $41.08.

Wells Fargo rose $1.02, or 3 percent, to $34.54 after its report.

Light, sweet crude fell $3.88 to $75.07 a barrel on the New York Mercantile Exchange. The dollar was mixed against other major currencies.

The drop in oil hit energy stocks. Exxon Mobil Corp. fell $6.46, or 8.9 percent, to $66. Chevron Corp. fell $5.87, or 8.6 percent, to $62.67.

Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 689 million shares.

The Russell 2000 index of smaller companies fell 30.38, or 5.48 percent, to 524.27.

In Asian trading, Hong Kong’s Hang Seng Index lost nearly 5 percent after rising more than 13 percent the previous two days. Markets in Australia, South Korea, China, India and Singapore also sank. Japan’s Nikkei 225 index, however, ended up 1.1 percent after soaring 14 percent in the previous session.

In Europe, Britain’s FTSE 100 fell 7.08 percent, Germany’s DAX index fell 6.49 percent, and France’s CAC-40 fell 6.82 percent.

The Dow Jones industrial average jumped more than 300 points in early trading today on top of yesterday’s historic 936-point gain. Wall Street surged again today as investors reacted enthusiastically to the U.S. government’s plans to spend $250 billion to buy stock in private banks.

In the first half-hour of trading, the Dow Jones industrial average rose 295.73, or 3.15 percent, to 9,683.34 after jumping more than 377 points in the early going.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 40.69, or 4.06 percent, to 1,044.04 and the Nasdaq composite index rose 42.90, or 2.33 percent, to 1,877.15.

Investors had snapped up stocks Monday in anticipation of the government’s plan. President Bush said Tuesday the government will use a portion of the $700 billion bailout to inject capital into the nation’s major banks, which have been slammed by souring mortgage investments. The move follows a similar one announced Monday by European governments to invest about $2 trillion in their own troubled banks.

Investors are hoping extraordinary steps by government officials will help resuscitate stagnant credit markets.

The revised bailout plan differs from the original in that it aims to recapitalize banks, not just buy the troubled assets off their books at prices that could leave the banks with losses.

“This begins to penetrate the core of the problem,” said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

But, he said, “there will be a point in time where the euphoria of the bailout plan begins to wear off and the market begins to face reality. And that reality is likely to be a sour earnings season, and that the economy is in recession.”

While the markets are enjoying a big rebound, stock trading may see ongoing volatility in the weeks and months ahead. The Dow remains 33.7 percent below its Oct. 9, 2007 record close of 14,164.53, and could fluctuate around these levels for some time as investors wait for signs of stabilization in the slumping housing market and deteriorating job market.

Stocks plunged in the final hour of trading Thursday, sending the Dow Jones industrial average down more than 675 points, or more than 7 percent, to its lowest level in five years after a major credit ratings agency said it was considering cutting its rating on General Motors Corp.

The Standard & Poor’s 500 index also fell more than 7 percent.

The declines came on the anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39 percent, since closing at 14,198 a year ago. The S&P 500, meanwhile, is off 655 points, or 42 percent, since recording its high of 1,565.15.

Thursday’s sell-off came as Standard & Poor’s Ratings Services put GM and its finance affiliate GMAC LLC under review to see if its rating should be cut. GM has been struggling with weak car sales in North America.

The action means there is a 50 percent chance that S&P will lower GM’s and GMAC’s ratings in the next three months.

S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford have adequate liquidity now, but that could change in 2009.

GM led the Dow lower, falling $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.

“The story is getting to be like that movie Groundhog Day,” said Arthur Hogan, chief market analyst at Jefferies & Co. He pointed to the still-frozen credit markets, and Libor, the bank-to-bank lending rate that remains stubbornly high despite the Fed’s recent rate cut.

“Until that starts coming down, you’ll be hard-pressed to find anyone getting excited about stocks,” Hogan said. “Everything we’re seeing his historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It’s not the kind of history you want to be making.”

According to preliminary calculations, the Dow fell 678.91, or 7.3 percent, to 8,579.19. The blue chips hadn’t closed below the 9,000 level since the June 30, 2003.

Broader stock indicators also tumbled. The Standard & Poor’s 500 index fell 75.02, or 7.6 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.47 percent, to 1,645.12.

The Russell 2000 index of smaller companies fell 47.37, or 8.67 percent, to 499.20.

A wave of fear about the economy sent stocks lower late in the final two hours of trading after a volatile start to a day in which major indicators like the Dow and the S&P 500 index bobbed up and down. The Nasdaq, with a bevy of tech stocks, spent much of the session higher but eventually as the sell-off intensified. Still, its losses were less severe because of the relatively modest drops in names like Intel Corp. and Microsoft Corp.

On the New York Stock Exchange, declining issues came to nearly 3,000, while fewer than 250 advanced.

The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed Thursday following days of efforts by the Federal Reserve and other central banks to resuscitate lending.

Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans for fear they won’t be paid back.

The Fed and other leading central banks this week lowered key interest rates to help unclog the credit markets and promote lending to help the global economy. While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment.

“We’re stuck in a morass and I think it’s going to take quite some time to come out of it,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group.

Demand remained high for short-term Treasurys, a refuge for investors willing to trade modest returns to protect their money. The yield on the three-month Treasury bill, which moves opposite its price, fell to 0.51 percent from 0.63 percent late Wednesday. Longer-term debt prices fell, with the yield on the 10-year note rising to 3.77 percent from 3.65 percent late Wednesday.

Investors across markets were mulling a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. The $700 billion rescue package signed into law last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.

Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of the country’s three major banks as it struggles to contain the troubles there.

Wall Street is also looking for any effects of short selling now that a three-week ban imposed by regulators has expired. Short selling is a technique in which investors borrow shares in a company from a broker and sell them, hoping to buy them back later at a lower price. Essentially, it’s a bet that a stock’s price will fall. Short sellers can lose money if they have to repurchase the stock after it has risen.

Some analysts believe the unprecedented ban on short selling — an effort to bolster investor confidence — did more harm than good at a time of historic market volatility. They contend that short sellers help the market rally by covering their bets and creating demand for stocks.

“I think the market’s way oversold. But I can’t stand in the way of this falling knife — I’d get sliced open,” said Phil Orlando, chief equity market strategist at Federated Investors. “Investors are just saying, get me out at any price.”

He also said that with the short-selling rule back in play, hedge funds might be shorting again to make up for their forced liquidations.

Volume on the NYSE came to 2.04 billion shares.

In Asia, Japan’s Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. In Europe, Britain’s FTSE-100 fell 1.21 percent, Germany’s DAX fell 2.53 percent, and France’s CAC-40 declined 1.55 percent.

The plan unveiled Tuesday calls for the Fed to buy the short-term debt that companies use to finance their day-to-day operations. That would help create demand in the credit market and make it easier for companies to raise money.

Investors who are still clamoring for an interest rate cut were relieved by the government’s new measure to help the economy. The credit markets seized up after the failure of Lehman Brothers Holdings Inc. Banks have been reluctant to lend to most customers, including other banks, fearing they won’t be repaid.

The Dow Jones industrials rose 49 points to the 10,005 level.

The Federal Reserve will buy “commercial paper,” a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.

The $99.4 billion daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up. That has made it increasingly difficult and expensive for companies to raise money to fund their operations. Commercial paper is a way of borrowing money for short periods, typically ranging from overnight to less than a week.

The unstable situation has left many companies vulnerable. The notion under the plan is for the government to provide a “backstop” that would give companies a new place to get cash, the Fed said. The action makes the Fed a source of credit for nonfinancial businesses in addition to commercial banks and investment firms.

The Fed said it is creating a new entity to buy three-month unsecured and asset-backed commercial paper directly from eligible companies.

“The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors” have become increasingly reluctant to buy commercial paper, especially longer-dated maturities.

The Treasury Department, which worked with the Fed on the program, said the action is “necessary to prevent substantial disruptions to the financial markets and the economy.” The Treasury will provide money to the Federal Reserve Bank of New York to support the new program, the Fed said.

If a company’s commercial paper is not backed by assets or other forms of security acceptable to the Fed, the company could pay an upfront fee, the central bank said.

The Fed said it hoped its effort would jolt the commercial paper market back to life.

“This facility should encourage investors to once again engage in term lending in the commercial paper market,” the Fed said. That should eventually spur financial companies to lend to each other and to their customers, including consumers, the Fed said.