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Last Updated: Thursday, 10 July, 2003, 21:04 GMT 22:04 UK
US shares tumble on job figures
US job fair
Job fairs are booming as more Americans seek work
The number of people out of work in the US has hit a 20-year high.

The queue of people making unemployment benefit claims for two weeks or more leapt 87,000 to 3.82 million in the week to 28 June.

This is the highest figure since February 1983, seasonally adjusted Labor Department figures showed.

The figures combined with weaker-than-expected results from internet giant Yahoo and retailer Wal-Mart to spark a sell-off on Wall Street.

'No end in sight'

The Dow Jones Industrial Average closed down 120 points, or 1.3%, at 9,036.

Businesses just are not hiring
Joel Naroff, economist
The broader Standard & Poor's 500 Index slumped 1.4% to 989.

The falls brought what investors are hoping will be a temporary break in the markets' recent good run.

Thursday's jobless figures come on top of a Labor Department report earlier this month, which showed the number of new claimants for US unemployment benefits in the latest week ending 5 July unexpectedly rose 5,000 to 439,000.

Wall Street analysts had been expecting a small decline in new claims.

Figures last week showed the US unemployment rate shot up unexpectedly to a nine-year high of 6.4% in June - up from 6.1% in May - as businesses axed 30,000 jobs.

"There just seems to be no end in sight to the softness in the labor market," said Naroff Economic Advisors president Joel Naroff.

Consumer spending

"Whatever hope we had from the downward trend we had been seeing seems to have disappeared," he added.

"Businesses just are not hiring."

Fears about rising unemployment continue to keep a lid on US consumer spending.

Retail giant Wal-Mart reported a small monthly sales gain, slightly below analysts' forecasts.

The company said June sales at stores open at least a year rose 2.7%.


The world's biggest company by revenue said warmer weather mid-month lifted demand for summer goods such as air conditioners.

It said it now expects July same-store sales to hit the high end of its forecast for a 2% to 4% gain.

Several other US retailers turned in disappointing results.

JC Penney's department stores reported a scant 0.1% increase in June same-store sales, but the retailer said sales picked up in the second half of the month after a sluggish start.

It said it now expects a second-quarter operating loss about equal to last year's.

Bucking the trend

Department store group Kohl's warned its second-quarter earnings would be well below estimates.

But fashion chain Gap continued to buck the trend, with like-for-like sales, at stores open at least a year, up 10% in June.

The results marked the ninth straight month of same-store sales growth for Gap, the largest US specialty retailer, following a 29-month slide.

Total sales for the five weeks to 5 July went up 13% to $1.5bn, the company said.

Food and drinks giant PepsiCo also reported strong figures.

It said quarterly profits were up 15%, on the back of a strong performance from its Frito-Lay snack business.

PepsiCo said it made $1.01bn profit, or 58 cents a share, in the three months to June 14, up from $875m, or 48 cents a share, a year earlier.

The company reported a 5% rise in worldwide volume, a measure closely watched by Wall Street.

Wal-Mart shares fell 1.6%, Gap slid 2.4% and JC Penney lost 1.9%. Pepsi shares gained 2.4%.

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