Stocks slumped yesterday after a jump in US unemployment to a six-year high dampened hopes for a swift economic rebound next year and spurred investors to lock in profits after this week's run-up. The economy shed jobs at a searing pace for a second straight month in November, pointing to further interest-rate cuts to try to combat recession. Analysts said the bleak numbers made an 11th rate reduction by the Federal Reserve a virtual certainty at its policy-setting meeting on Tuesday.

Upbeat forecasts from high-tech icons such as Intel Corp and rival Advanced Micro Devices Inc served as harbingers of better times but investors sold on fears the recovery may be slower than expected. Bonds dropped for a third straight day, as traders took profits after this year's strong run-up.

The technology-laced Nasdaq composite index dropped 33.29 points, or 1.62 per cent, to end at 2,020.98. The blue-chip Dow Jones Industrial Average fell 49.68 points, or 0.49 per cent, to 10,049.46. The broader Standard & Poor's 500 index lost 8.84 points or 0.76 per cent, at 1,158.26.