Stocks Sink On Jobs Slowdown; CNBC Trader Warns Of 'Great, Great Depression'
WASHINGTON (CBS/AP) — Wall Street may be giving up on its hope for a robust economic recovery in the U.S. — with one trader warning of even rockier times ahead.
Stocks tumbled on Wednesday on more signs that the economy is slowing, including one report showing private employers added 38,000 jobs in May, down from 177,000 in April.
Payroll processor ADP said it's the weakest result since September.
Jon Najarian of OptionMonster.com told KNX 1070 that increased talk of austerity in the face of continued job losses may chase investors out of the market.
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"The bottom line is the markets really do like bailouts, and the markets in general do not like austerity" Najarian said. "So if you start hearing more about austerity, we're going to see more of this corrective activity."
But even the market's most seasoned traders are having a hard time determining their next move.
Peter Yastrow, market strategist for Yastrow Origer, told CNBC there is an "almost near panic going on with money managers and people who are responsible for money" over the direction of the market and the economy at large.
"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We're on the verge of a great, great depression. The [Federal Reserve] knows it."
Even manufacturing, one of the economy's bright spots since the recession technically ended, is losing momentum. Manufacturing grew last month at its slowest pace since September 2009, the Institute for Supply Management reported Wednesday.
U.S. auto sales also cooled off in May after setting a torrid pace earlier in the year, as General Motors' sales fell 1.2 percent as it offered fewer deals to customers and cut sales to rental car companies.
CBS News auto industry reporter Jeff Gilbert told KNX 1070 General Motors Co Wednesday said that the U.S. government may lose nearly 20 percent of the nearly $80 billion in bailout funds granted to the auto industry in 2008.
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"But hey, with the government, maybe that's considered a profit," Gilbert added.
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