JOBS DISAPPEAR

COUNTRYWIDE SLASHES 12K AFTER DOW SINKS 249

By PAUL THARP

September 8, 2007 -- Sharply shrinking payrolls - with a surprise 12,000 jobs slashed at ailing home lender Countrywide - are raising new fears about Wall Street's dangerous roller-coaster ride.

Stocks tumbled from the opening bell yesterday after the Labor Department unexpectedly reported the work force shrank in August. Instead of a gain of 110,000 jobs, as the experts expected, the report said there was a loss of 4,000 jobs. In August, 30,000 jobs were wiped out in the mortgage industry alone.

The news triggered a plunge of nearly 2 percent across all three indexes. After markets closed, Countrywide said its financial crisis will force it to slash 20 percent of its workforce, or as many as 12,000 jobs, over the next three months.

Shares of Countrywide jumped 2.1 percent to $18.60 in after-hours trading because investors believe the payroll cuts will help ease the company's cash squeeze.

But the drastic layoffs could drag down stocks again on Monday when trading resumes. Many investors believe the grimmer outlook raises chances that the Federal Reserve will cut interest rates at its scheduled Sept. 18 meeting.

The jobs data "was so negative and bad, now the recession fear is jumping back into the market," said equity strategist Scott Wren at A.G. Edwards & Sons.

The Dow Jones industrial average fell 249.97, or 1.87 percent, to 13,113.38. while the Standard & Poor's 500 index lost 25, or 1.69 percent, to 1,453.55. The Nasdaq dropped 48.62, or 1.86 percent, to 2,565.70.

The Dow lost 1.8 percent for the week, while the S&P 500 dropped 1.4 percent and the Nasdaq shrank 1.2 percent.

Stocks taking the biggest hits included industrial, technology and consumer shares. Caterpillar Inc. skidded $2.31, or 3.1 percent, to $73.44, and Honeywell lost $1.95, or 3.4 percent, to $54.71. Chip maker Intel Corp. dropped 68 cents, or 2.6 percent, to $25.47.

Meanwhile, Ed Lazear, the White House's top economic adviser, said he doubts the poor jobs outlook will spark a recession. "There's always a chance of recession. We don't think it's likely," Lazear said.

paul.tharp@nypost.com