NEW YORK - The first full week of 2009 didn't bring Wall Street any huge shocks, but it didn't bring much for investors to be happy about, either.
A jump in unemployment sent stocks sharply lower Friday, as investors feared that consumers won't soon deviate from their tightened budgets. The Dow Jones industrial average fell 143 points to end the week down nearly 5 percent, its worst week since November.
The Labor Department's much-anticipated report showed that employers cut 524,000 jobs in December, a smaller decline than the 550,000 loss that economists forecast. But the unemployment rate jumped to a 16-year high of 7.2 percent -- more than the 7 percent economists predicted -- from 6.8 percent in November.
Lost jobs were not a shock to Wall Street, but the news still stung.
"People say that they know how bad the economy is. But they don't know how it feels to have the reality hit home," said Stu Schweitzer, global markets strategist at J.P. Morgan's Private Bank. "It's not the facts -- it's how the facts feel. And it feels terrible to have so many Americans losing jobs, and so many more likely to follow in the coming months."
Rising unemployment tends to erode consumer spending, which accounts for more than two-thirds of U.S. economic activity. In 2008, the economy lost 2.6 million jobs -- the most since 1945. Retailers have been reporting dismal holiday sales figures, and Wall Street is concerned about how long the economy will suffer a pullback in consumer spending.
The Dow Jones industrial average fell 143.28, or 1.64 percent, to 8,599.18. The blue chips' 4.8 percent decline for the week was the biggest point and percentage loss since the week ended Nov. 21.
Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 19.38, or 2.13 percent, to 890.35, and the Nasdaq composite index shed 45.42, or 2.81 percent, to 1,571.59. For the week, the S&P 500 slid 4.5 percent and the Nasdaq lost 3.7 percent.
