Advertisement

Jobs Data Send Stocks Falling; Yields Also Dip

Share
From Times Staff and Wire Reports

The recession wolf was back at Wall Street’s door Thursday.

Stocks slumped after a big jump in jobless-benefit claims and in corporate layoffs reignited fears the U.S. economic slowdown may be deeper than expected.

Chilling comments about the ongoing swoon in semiconductor sales from chip-equipment maker Novellus Systems also hit stocks.

The selling, which broke a four-day winning streak for tech stocks that had been powered by hopes of a rebound in corporate earnings, sent investors to safe havens such as tobacco shares and bonds.

Advertisement

The technology-laden Nasdaq composite index fell 74.40 points, or 3.4%, to close at 2,146.20 and snap a four-session rally.

The Dow Jones industrial average lost 80.03 points, or 0.8%, to 10,796.65. All but seven of the Dow’s 30 component stocks fell, and the slide left the blue-chip index virtually unchanged for the year--up 0.1%.

The broader Standard & Poor’s 500 index fell 18.85 points, or 1.5%, to 1,248.58.

Losers led winners by a 23-15 margin on Nasdaq and by 3-2 on the New York Stock Exchange. Volume was moderate on both markets.

Investors were bracing for today’s U.S. jobs report for April, which is expected to show an uptick in unemployment.

“The big concern here is [the] jobs number,” said Jeff Kleintop, investment strategist at PNC Advisors. “If in fact we see . . . that we had a [drop in] jobs in the month of April, that’s going to raise some questions about the consumer, and the consumer really is the linchpin in the economy here.”

The government reported Thursday that weekly first-time jobless claims climbed in the week ended April 28 to their highest level since 1996. Also, job cuts announced by U.S. companies soared in April, according to outplacement firm Challenger, Gray & Christmas.

Advertisement

Newell Rubbermaid became the latest victim of the economic slowdown to announce job cuts. The consumer and business products maker reported a sharp drop in profit and said it will cut 6% of its work force to reduce costs. Newell shares lost $1.49 to $25.85.

In the tech sector, Novellus dropped after Chief Executive Richard Hill said the semiconductor equipment maker doesn’t expect a rebound in orders until the fourth quarter. Novellus sagged $3.05 to $52.44.

Among Novellus’ rivals, KLA-Tencor slid $2.93 to $51.06 and Applied Materials lost $2.09 to $52.60.

What was bad for tech was good for bonds and some non-tech stocks: As worries about the economy revived, investors moved assets into U.S. Treasuries and classic “safe haven” stocks such as tobacco issues.

The yield on the benchmark 10-year T-note fell to 5.20% from 5.29% on Wednesday. Shorter-term yields also pulled back.

Among Thursday’s highlights:

* Personal computer stocks helped lead tech shares lower after Dell Computer vowed to continue “ruthless” price-cutting. Brokerage UBS Warburg also cut its rating on Dell to “buy” from “strong buy” and trimmed near-term earnings estimates.

Advertisement

Dell dropped $1.80 to $24.93, Compaq fell 55 cents to $17.40 and Apple slid $1.63 to $24.96.

* Semiconductor and computer-networking issues were broadly lower. PMC-Sierra fell $3.16 to $38.21, Broadcom lost $4.57 to $43.79, Intel was off $1.52 to $30.40 and Cisco Systems lost $1.34 to $18.66.

* Biotech shares slumped. Amgen fell $2.80 to $59.44 and Human Genome Sciences dropped $4.34 to $59.17.

* Among heavy-industry shares, Phelps Dodge fell $1.80 to $44.65 after the copper giant cut its quarterly dividend to 12.5 cents from 50 cents and canceled plans to sell two subsidiaries.

* On the plus side, some investors sought safety in tobacco shares. Cigarette, food and beer giant Philip Morris rose 59 cents to $51.60. Also, Loews gained 32 cents to $65.75 after the diversified holding company reported a 7% rise in quarterly earnings, led by higher results from its tobacco operations.

*

Market Roundup: C6-7

Advertisement