Europe and Fed-watching in focus

Stocks plunged more than 2% losses after a U.S. jobs report showed slim growth in May. The U.S. economy added only 69,000 jobs in May, while economists expected an increase of 165,000. The unemployment rate edged up to 8.2% from 8.1% as more people entered the workforce. The ISM manufacturing index fell to 53.5% in May, sliding below 54% expected. The technology sector joined a broad market retreat with Hewlett-Packard highlighted the declines tumbling 6.3% as the co. took a hit from an analyst downgrade. Jefferies cut its rating to hold from buy citing worries that tablets will hurt PCs, smartphones will hurt printers, and European uncertainty will hurt enterprise IT spending. In the coming week, investors will closely watch any updates on Greece’s commitment to remaining in the euro zone, the Fed’s Beige Book, factory orders, the ISM services index for April, first-quarter productivity and labor cost figures, April trade deficit and wholesale inventories data. Implied volatility surged above the 27 level on huge trading volumes.

Ended a month on a weak note

Stocks finished in the red, ending a month on a weak note. The Dow and S&P 500 dropped more than 6%, the Nasdaq has declined 7% in May. Worries about Spain not being able to fund bank bailouts, which could reach a cost of as much as €100 billion, continue to build. The IMF said it will begin its annual economic review of Spain next Monday. Also, U.S. GDP growth for the first quarter was revised lower to a 1.9% annual rate, slower than the 2.2% rate first estimated. ADP private-sector payrolls showed a gain of 133,000 jobs, less than the 157,000 forecast by economists. Additionally, weekly initial jobless claims rose 10,000 to 383,000, higher than the expected 368,000 forecast. The Chicago PMI, fell for a third straight month to 52.7, the lowest level since May 2009. The index was expected to come in at 57 for May, up from 56.2 in the month prior. The tech sector slipped into the red, while Facebook recovered from early losses to close 5% higher. Intel slipped 1% after Morgan Stanley initiated coverage of the stock with an underweight rating, citing slower growth and potential margin erosion. Meanwhile, Zynga rose 7% after Baird Equity Research upgraded the stock to outperform from neutral, saying “headwinds appear largely priced in. Implied volatility inched higher on moderate trading volumes.

Fell sharply on fears over Spanish banks

Stocks fell sharply on worries about Europe's debt crisis, specifically the Spanish banking system. Bond yields in Spain and Italy surged to 6.6% and polls out of Greece added to the uncertainty over whether it would remain in the euro zone. Tech stocks were mostly in the red, with Facebook sliding 2.3%. Research in Motion tumbled 7.8% on news it hired JPMorgan and RBC Capital to review its strategic options, which is generally a signal it is putting itself up for sale, the co. also warned it now expects an operating loss for its fiscal first quarter, which ends on June 2. Implied volatility surged above the 22.5 level on huge trading volumes.