It’s no surprise that stocks are in the red after the weaker than anticipated employment figures for June, but the depth of losses roughly 90 minutes into the session are staggering.

The Dow has dropped 168 points to 8335 (-1.99%), the S&P 500 has shed 20 points to 903 (-2.15%), and the Nasdaq is the worst of the bunch with a 45-point loss to 1801 (-2.42%). 

The pace of losses in the labor market had been moderating for four months but in June nearly half a million jobs vanished from the economy, in contract to widespread expectations. The Bureau of Labor Statistics said 467,000 jobs were lost, pushing the unemployment rate to 9.5%, the highest in 26 years.

“The heavy loss of jobs in June is a warning that the road to recovery will be bumpy, but doesn't yet indicate that we have gone off the track,” said analysts from IHS Global Insight, who expect the unemployment rate to hit 10.3% in the first months of 2010. “The report underlined that it will take much longer for the labor market to bottom out than for GDP and industrial production.”

Average weekly hours hit a cycle low at 33.0 hours, and wage growth was nonexistent during the month, though it is up 2.7% compared to last year.

The morning’s Jobless Claims report also suggests a turnaround is still a long way off. In the final week of June, another 615,000 Americans filled for first-time benefits, marking the 22nd straight week that claims have been above the 600k threshold.

To put that into perspective, sustained weekly filings north of 400k are considered recessionary.

The number of people continuing to receive jobless benefits fell 53k in the week ending June 20, but with 6.70 million people on the dole a single week of declines is far from inspiring.

Moreover, many economists noted the decline in continuing claims doesn’t necessary indicate job creation.

“A record large number of claims recipients are rolling off of the standard 26-week period, but still cannot find work,” said Deutsche Bank’s Joseph LaVorgna. “As such, they are eligible to receive benefits from the supplemental benefits programs but they do not show up as continuing claims recipients.”

The only other data release of the day was Factory Orders at 10:00, which rose 1.2% in May. Durable goods orders rose 1.8% in the month, while nondurable goods orders rose 0.7%. Those figures are better than forecasts, yet markets were still reeling from the labor figures and continued to tumble afterwards. 

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