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August 5, 2009
U.S. stocks were under pressure Wednesday as investors focused on the job market as the biggest piece of the economic puzzle that still needs to fall into place for a sustained recovery.
The Dow Jones Industrial Average was recently off 100 points at 9220. The Nasdaq Composite Index was down 1.2%. The S&P 500 was off 1%, hurt by declines of about 1% in its utilities, consumer-discretionary and consumer-staples sectors. The financial sector was the only S&P category trading higher, up 0.5%.
Data from the consulting firm Automatic Data Processing and Macroeconomic Advisors showed a slowing but still-brisk pace of private-sector job losses. The private sector shed 371,000 jobs last month, more than the 350,000 economists expected but less than the number of jobs eliminated in previous months. The report is a precursor to the government's monthly jobs report, due Friday.
A report on U.S. service-sector was also weaker than expected. The Institute for Supply Management said its monthly index of non-manufacturing activity was 46.4 in July, down from 47.0 in June, indicating a quickening contraction in activity.
Some were investors are still taking a breather after the market's summer rally. Major indexes came into Wednesday's action at their highest levels since the fall, when the financial and economic crises were in their early stages.
Strategist Phil Guarco, of J.P. Morgan Private Bank, said his firm has been putting more of its clients' cash to work in both debt and stocks lately, including a more aggressive push into small-capitalization stocks that have lagged the recent rally.
While Guarco said he believes a broader global recovery is underway, he's also still on guard against the lingering effects of the recession's final stages, including weakness in the employment sector.
"It's a tactical trade," he said of the increased small-cap holdings. "If we get the gains we're looking for in three to six months, we'll back out."
Treasury prices were lower but off their lowest levels of the morning after the ADP report. The benchmark 10-year note was off 14/32 to yield 3.74%, while the 30-year bond slid 1 2/32 to yield 4.53%. The dollar rose against the yen and the euro.
Earnings reports continued to move individual stocks. Procter & Gamble, a Dow and S&P component, slid 3.6% after reporting a 18% decline in its net and projecting further declines in sales in the current quarter. Whole Foods Market rose nearly 21% after its increased its earnings forecast.
Crude-oil prices were slightly lower ahead of a weekly report on inventories of fuel in the U.S. Traders expect to see an increase in stockpiles. The front-month crude-oil futures contract traded near $71.30 a barrel, losing a little ground after the weaker-than-expected employment report.
The dollar was mixed. One euro cost $1.4379, down from $1.4398 late Tuesday. One dollar fetched 95.17 Japanese yen, down from 95.27 yen.
European stocks were flat. Asian stocks were more downbeat, with the Nikkei 225 falling 1.2% and the Hang Seng falling 1.4%.
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