* May payrolls report far weaker than expected
* Hungary raises specter of Greece, bank shares fall
* BP avoids decision on paying dividend
* Dow off 2.7 pct, S&P off 3 pct, Nasdaq off 3.1 pct
* For up-to-the-minute market news see []
(Updates to late afternoon)
By Leah Schnurr
NEW YORK, June 4 (Reuters) - U.S. stocks sank on Friday
after the economy added fewer-than-expected jobs in May, while
a possible new debt crisis in Hungary added to the gloom.
Data showed the U.S. economy added fewer-than-expected jobs
last month, with a large portion of those being temporary
hirings for the U.S. Census. For details, see []
"There's no other way to describe it except flat out
disappointing," said Mike O'Rourke, chief market strategist at
BTIG LLC in New York. "Once you get beyond the Census numbers,
it was abysmal."
Industrial shares, which are sensitive to economic cycles,
led the slide. Large manufacturers were among the biggest
losers on the Dow, with manufacturer Caterpillar Inc <CAT.N>
sliding 5.1 percent to $57.98 and conglomerate United
Technologies Corp <UTX.N> shedding 3.6 percent to $65.44.
The drop in stocks of 3 percent follows Wall Street's first
back-to-back advances since late April. Worries that Europe's
sovereign debt troubles could spread flared again after a
Hungarian official said the country was at risk of a
Greek-style crisis, driving the euro <EUR=> to a four-year low
against the dollar. [] []
The Dow Jones industrial average <> dropped 280.00
points, or 2.73 percent, to 9,975.28. The Standard & Poor's 500
Index <.SPX> shed 32.68 points, or 2.96 percent, to 1,070.15.
The Nasdaq Composite Index <> lost 71.77 points, or 3.12
percent, to 2,231.26.
The CBOE Volatility Index or VIX <.VIX>, Wall Street's
favorite barometer of investor fear, shot up 18.1 percent to
34.08 in midafternoon.
Financial stocks ranked among the worst performers, with the
KBW Banks index <.BKX> down 3.8 percent. JPMorgan Chase & Co
<JPM.N> shed 2.5 percent to $38.12, while Bank of America Corp
<BAC.N> slipped 2.1 percent to $15.48.
Further exacerbating the pressure on Wall Street were
concerns from Europe about Societe Generale's <SOGN.PA>
derivatives business. The company said it would not comment on
market talk about the bank's derivatives operations.
[]
The Labor Department said the U.S. economy added 431,000
jobs in May -- far short of the 513,000 that Wall Street had
expected.
Even so, analysts said it didn't alter their view that the
economy is stabilizing, with many expecting unemployment will
remain high for some time.
There have been nine days since 1998 when payrolls data was
reported and the SPDR S&P 500 exchange-traded fund (ETF) <SPY>
opened down 1 percent or more, according to Bespoke Investment
Group. On those days, the fund rose an average of 1.2 percent
from open to close.
The ETF was down 3 percent on Friday afternoon.
Chris Burba, a short-term market technician at Standard &
Poor's in New York, cited a support level for the S&P 500 at
1,070, a recent low for the index. If the S&P closes below that
level, he said, "The risk of sustaining a decline beneath the
February low would increase."
BP Plc <BP.L><BP.N> began capturing some oil spewing from
the ruptured oil well in the Gulf of Mexico. The company also
put off a decision on whether to pay its next quarterly
dividend as some politicians have demanded. BP's U.S.-listed
shares fell 4.4 percent to $37.53. []
Decliners were carrying the day, outnumbering advancers on
the New York Stock Exchange by a ratio of more than 8 to 1,
while on the Nasdaq, about 7 stocks fell on the Nasdaq for
every one that rose.
(Reporting by Leah Schnurr; Additional reporting by Caroline
Valetkevitch; Editing by Kenneth Barry)
