Weak job performance sends stocks down, oil up
- From: "Joe S." <anon@xxxxxxxx>
- Date: Fri, 7 Jul 2006 20:42:47 -0400
QUOTE
NEW YORK (CNNMoney.com) -- Stocks tumbled Friday, with the Dow and Nasdaq
closing down over 1 percent, after disappointing corporate news and the
monthly jobs report pointed to slowing growth and rising inflationary
pressure in the world's largest economy.
The Dow Jones (down 134.63 to 11,090.67, Charts) industrial average and the
Nasdaq (down 25.03 to 2,130.06, Charts) composite skidded 1.2 percent.
The broader Standard & Poor's 500 (down 8.60 to 1,265.48, Charts) fell 0.7
percent.
Oil fell more than a dollar after setting another record high earlier in the
session, Treasurys rallied and the dollar sank.
The Nasdaq was the week's big loser, dropping 1.9 percent. But the Dow also
ended the week down 0.5 percent and the S&P finished 0.4 percent lower.
Next week kicks off second quarter earnings season, with reports due from
Alcoa (Charts) on Monday and General Electric (Charts) and Pepsi (Charts)
Thursday.
Analysts are expecting an overall strong quarter, with concern centered on
third quarter guidance.
And while there are no major economic reports scheduled, investors will
still keep an ear tuned for any clues on how the Federal Reserve will move
on interest rates at its next meeting.
Friday's action
Employers added a smaller-than-expected 121,000 new workers to their
payrolls last month, the Labor Department said Friday morning, versus
forecasts for 160,000.
Investors had hoped a tame jobs report might have helped persuade the
Federal Reserve to pause in its interest rate hiking campaign, but it
appears Friday's number fell a little too short.
"While bad news is good news vis-a-vis the Fed, bad news is still bad news
for the economy," said Bryan Piskorowski, a market analyst at Wachovia
Securities. "Two years of Fed tightening is going to have an effect."
Concerns that the Fed will raise rates too high, cutting off cheap capital
and crippling economic growth, have weighed on investors for months.
But Friday's report didn't help ease concerns about future rate hikes, as
wages showed a 3.9 percent year-over-year increase last month, the biggest
gain since 2001.
"That's what killing it," said Harry Clark, chief executive of Clark Capitol
Management. "It's scaring the market about the Fed [and] rates, that's all."
Another analyst said geopolitical tensions, such as threats of an attack
against New York City tunnels and the recent missile tests by North Korea,
were also having an effect.
"There's a lot of emotion, a lot of nervousness," said Jordan Kimmel, a
market strategist for the brokerage firm National Security Corp.
In corporate news, Dow component 3M (down $7.29 to $74.10, Charts), the
maker of Post-it notes, Scotch tape and a host of other industrial products,
nearly over 9 percent after the company lowered its second quarter earnings
guidance.
It was the worst day for the stock in nine years, and accounted for about a
third of the Dow's losses.
Among the 30 issues in the Dow, 25 fell, four rose and one was little
changed.
General Motors (up $0.28 to $29.48, Charts) rose almost 1 percent after the
company said it would hold "exploratory discussions" with Renault and Nissan
regarding a possible alliance among the three automakers.
In the tech sector, Advanced Micro Devices (Charts) fell over 1 percent
after the chipmaker slashed its second-quarter sales forecast late Thursday.
And Starbucks (down $1.84 to $36.04, Charts) sank nearly 5 percent after the
coffee purveyor said late Thursday that sales at stores open at least a year
rose 6 percent, which was at the low end of Wall Street's estimates.
Light, sweet crude oil slid $1.05 to settle at $74.09 a barrel on the New
York Mercantile Exchange after hitting a new trading record of $75.55
earlier in the session.
Treasury prices rallied, lowering the yield on the 10-year note to 5.13
percent from 5.18 percent late Thursday.
The dollar tumbled versus the yen and the euro.
Market breadth was lower. On the New York Stock Exchange, losers beat
advancers by a margin of two to one on volume of 1.42 billion shares. On the
Nasdaq, decliners beat advancers by a margin of five to two as 1.78 billion
shares changed hands.
END QUOTE
http://money.cnn.com/2006/07/07/markets/markets_newyork/index.htm?cnn=yes
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