Stocks Fall Ahead of Job Data
Stocks slid Thursday as investors focused on the government employment report due out today, shrugging off OPEC’s widely anticipated decision to raise its crude oil output.
Concern over Intel’s mid-quarter forecast put particular pressure on technology shares, although the report, which was issued after the session ended, was more upbeat than some market participants expected.
The promise of more oil and a bullish reading of worker productivity failed to spark a rally as many investors took a cautious tack ahead of the Labor Department’s jobs report.
“Basically, we’re just treading water before [today’s] employment data,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “There’s a concern that a creeping rise in energy prices could slow the economy down more, so this is the next data point the market is looking at for guidance.”
The Dow Jones industrial average fell 67.06 points, or 0.6%, to 10,195.91.
The broader gauges also finished lower. The Nasdaq composite index slumped 28.72 points, or 1.4%, to 1,960.26, largely on weakness in the semiconductor sector. The Standard & Poor’s 500 index shed 8.35 points, or 0.7%, to 1,116.64.
Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange in light trading.
Treasury yields fell, and analysts said the bond market was also awaiting the results of today’s jobs report for a sense of direction. Most analysts predict that the government’s tally of U.S. payrolls will reveal another burst of hiring and force the Federal Reserve to begin raising interest rates this month.
The yield on the benchmark 10-year Treasury note fell to 4.71% from 4.74% on Wednesday.
Oil prices dipped to $39.28 a barrel from $39.96 on Wednesday, after the Organization of the Petroleum Exporting Countries agreed to raise its production ceiling by 2 million barrels a day, and by an additional 500,000 barrels a day in August if necessary.
After trading ended Thursday, Intel raised its revenue forecast for the second quarter, citing continued strong demand for computer chips. Intel dropped 60 cents to $27.41 during regular trading on speculation that it might lower its estimate. It recovered 54 cents in the after-hours session.
There was little reaction to a better-than-expected report from the Labor Department on the productivity of America’s workers in the first three months of the year. Labor costs also moved up, a worrisome factor that could pressure company profit margins if increases become a trend.
Today’s job report has broader implications. If the number of new jobs generated during May is dramatically higher than the 225,000 the market expects, investors fear it could prompt the Fed to raise interest rates sooner and more sharply than it might otherwise.
If the number comes in much lower, it could delay a rate hike but be viewed as a sign that the economic recovery is stalling.
Among Thursday’s market highlights:
* Reflecting continued concern about pending interest rate hikes, Bank of America adjusted its view of the insurance sector Thursday, downgrading its recommendation on Allstate and Hartford Financial Services to “neutral” from “buy.” Allstate shed 76 cents to $43.46; Hartford Financial lost 59 cents to $65.75.
* Many of the nation’s retailers reported strong monthly sales in May -- reassuring after consumers pulled back in April amid rising energy costs. Wal-Mart gained 25 cents to $56.60 after announcing a 5.9% increase in May sales.
Sears, however, reported a bigger-than-expected drop in sales. Its shares fell $1 to $37.13.
* Many tech stocks declined. The Philadelphia semiconductor index lost 2.5%, the steepest drop in five weeks. Texas Instruments fell 84 cents to $24.34. Advanced Micro Devices, the second-largest maker of personal computer processors, declined 49 cents to $14.59. Research in Motion, which makes BlackBerry e-mail pagers, dropped $4.29 to $76.50.
* Autobytel fell for a second straight day, losing 78 cents, or 8.5%, to $8.35. The chief financial officer of the operator of Internet-based referral services for car buyers said second-quarter earnings may be about 3 cents a share, less than the 5-cent average analyst estimate.
Market Roundup, C5
