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The S&P 500 (NYSEARCA:SPY) is heading for its biggest weekly loss in a single month, after the non-farm payroll report came out 20% less than expected on 7/6/2012.

The U.S. economy added 225,000 jobs in the months of January and February each, but the next three months a total of 225,000 non-farm jobs were gained, less than the single month job gains in each of the first two months of 2012.

Last month's jobs report on 06/01/2012 showed the worst jobs growth in the prior year, and had caused the biggest drop n the S&P500 of 2012.

Investors resorted to safe bets in June such as Treasuries, causing the month of June to be excellent for government bonds like TLT, TLO, ZROZ and EDV.

All 10 Industry Groups Down

On Friday, all 10 industry groups in the S&P 500 were down.

Chevron Corp. (NYSE:CVX), Alcoa Inc. (NYSE:AA) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) were all in the red. In the financials, JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp. (NYSE:BAC) were both down as well.

Worse performance was seen in the IT sector. Shares of Seagate Technology Plc (NASDAQ:STX) plunged after announcing it will miss forecasts (note that it was because of a supplier quality issue though), causing a barrage of downgrades and a cascading effect on shares of software companies like Teradata Corp. (NYSE:TDC), Citrix Systems (NASDAQ:CTXS), EMC Corp. (NYSE:EMC) and peers.

Seasonality?

Are these just seasonal adjustments or is the U.S. economy really slowing? Sounds like the latter, considering that we are seeing similar patterns worldwide, especially Europe and China.

For example, China announced a rate cut on Thursday, after probably getting worried about a hard landing. IMF later announced that it will trim its global growth forecast of 3.5% for 2012. And on Thursday, the ECB announced a rate cut as well.

What Ben said

On 06/20/2012, Ben Bernanke had said in a press conference that the Fed would look at jobs to decide whether FOMC needs to step in to ease further to improve the labor market.

Bernanke had then said,

FOMC reviews the entire labor market when considering action, not just unemployment numbers but also labor force participation and other trends, and is looking for sustainable growth.

Conclusion

The Fed now has more impetus to step up with QE3, at least going by Bernanke's comment from last month's press conference. And if Friday's dismal job report does not ask for a QE3, what does?

Source: Ben's Comments About More Easing