NEW YORK, Aug 2: Stocks closed lower on Friday as surprise news of heavy job losses in July dashed upbeat investor sentiment, negative corporate news, including weaker-than-expected earnings from ChevronTexaco also forced the market lower.

The Dow Jones industrials closed down 79.83 points, or 0.86 per cent, at 9,153.97 while the Nasdaq closed down 19.43 points, or 1.12 per cent, at 1,715.59.

The broader Standard and Poor’s 500 index closed down 10.16 points, or 1.0 per cent, at 980.15.

Trading volume was relatively light during the day, some 1.4 billion shares changed hands on Wall Street while about 1.5 billion swapped hands on the Nasdaq.

Confidence was knocked in the morning after a key government report showed employers shed 44,000 jobs from the workforce in July, defying forecasts of a slight increase in employment and bringing six months of total job losses to 486,000.

Investors subsequently sold off through the afternoon session, largely discounting president George W. Bush’s comments to reporters that the economy is “vibrant and strong” and will create jobs.

“We’ve priced in perfection and that’s what we need to sustain these levels,” said Art Hogan, chief market strategist at Jefferies Co.

“We got a mixed bag of economic news today. (The losses in) in manufacturing payrolls were a big disappointment,” Hogan added.

The unemployment rate dipped to 6.2 per cent in July from 6.4 per cent in June, but only because the total labour force — those in work or seeking employment — contracted by 556,000 people.

The job news put an end-of-week damper on the markets which had tried to move higher in the week on renewed optimism the economy was rebounding, traders said that optimism may have been a shade premature.

“I think this employment number is a way to remind everybody that it’s a slow process,” said Citigroup chief US economist Robert DiClemente.

Wall Street’s demise Friday was tracked by the European markets which fell on the back of the US job news.

In London, the FTSE 100 index of leading shares finished on a loss of 1.41 per cent at 4,098.4 points, while the Paris CAC 40 fell 1.27 per cent to 3,169.63 points.

Frankfurt’s DAX was down 1.40 per cent 3,438.89 points and across the euro zone the DJ Euro Stoxx 50 shed 1.59 per cent to 2,479.7 points.

Several disappointing corporate reports also drove US shares lower on the day.

Oil behemoth ChevronTexaco Corp reported lower-than-expected net profit of $1.6 billion, or $1.50 a share, in the second-quarter from a year ago.

Although the oil group’s profits quadrupled compared with the second-quarter of 2002, its profits fell short of Wall Street forecasts which had called for $1.52 a share.

ChevronTexaco closed down $1.06, or 1.5 per cent, at $71.05 a share.

Healthcare group Johnson and Johnson also took a beating, closing down $1.36, or 2.6 per cent, at $50.43 a share, after Merrill Lynch downgraded its stock to “netural” from “buy” on product launch worries.

Others stocks in focus included Citigroup which fell $1.35, or 3.0 per cent, to close at $43.45 and General Motors which fell 0.16 cents, or 0.4 per cent, to $37.27.

Disney defied the day’s trend, however, as its stock closed higher on the back of better-than-expected earnings.

A robust film and television networks lifted Disney’s fiscal third-quarter profits up 10 per cent to $400 million or 19 cents a share, 3 cents above analysts’ forecasts, according to Thomson First Call.

Disney stock closed up 0.60 cents, or 2.7 per cent, at $22.52.

Bond prices were mixed on the weaker July job report.

The yield on the 10-year US Treasury bond rose to 4.415 per cent from 4.429 per cent Thursday while the yield on the 30-year bond fell to 5.330 per cent from 5.410 per cent. Bond yields and prices move in opposite directions.—AFP