Stocks pulled down by job data


  • Business
  • Sunday, 07 Sep 2003

By RACHEL COHEN

NEW YORK: Stocks dropped on Friday, pulled lower by an unexpected fall in jobs in August and a large institution's big trade moving money from stocks to bonds, traders said. 

The move knocked stocks lower across the board after days of gains. Technology shares were not able to hold onto gains won earlier in the day on a bullish forecast from semiconductor heavyweight Intel Corp. 

Non-technology stocks had already been pulled lower by a surprisingly weak jobs report. 

“These numbers are very disappointing, extremely weak,” said Kathleen Stephansen, director of global economics at Credit Suisse First Boston. “It's saying that essentially the labour market continues to lag sorely behind the other numbers. The missing link in this recovery/expansion remains the labour market.” 

The blue-chip Dow Jones industrial average dropped 84.56 points, or 0.88%, to 9,503.34. The broader Standard & Poor's 500 Index fell 6.6 points, or 0.64%, to 1,021.37. The technology-laced Nasdaq Composite Index was down 10.85 points, or 0.58%, at 1,858.12. 

Treasury prices rose, pushing down the yield on the benchmark 10-year note to 4.34% from 4.51%. 

“It looks like somebody out there put out an asset allocation trade,” said Tom Schrader, managing director of US equity trading at Legg Mason Wood Walker. “We're estimating it be a little more than a billion dollars and it looks like they were selling equities and buying bonds. That's what caused the massive dislocation in both the equity market and the jump in the bond market.” 

The Nasdaq snapped a string of seven up sessions. The S&P 500 fell after notching gains in the previous eight and the Dow fell after rising in the previous five sessions. 

Despite their drops for the day, the Nasdaq and the S&P 500 both had a fourth straight week of gains, while the Dow racked up its fifth. 

Volume was active with 1.44 billion shares traded on the New York Stock Exchange and 1.94 billion changing hands on the Nasdaq. Decliners outnumbered advancers about 6 to 5 on the NYSE and 9 to 7 on the Nasdaq. 

The government on Friday said employers cut jobs in August at the fastest clip since March, disappointing investors after a string of solid economic reports in past weeks. The number of workers on US payrolls outside the farm sector slid 93,000 in August, far worse than the 12,000 increase expected by economists. 

A recent string of better-than-expected data on retail sales, durable goods, consumer sentiment and housing had led economists to believe the labour market might be improving. 

The unemployment rate fell, but only to 6.1% from 6.2% in the previous month. Analysts had expected the unemployment rate to hold steady at 6.2%. 

Intel, the world's largest maker of semiconductors, ended 11 cents higher at US$28.71. Earlier, Intel had helped underpin the market, then dipped into negative ground before recovering. The Nasdaq giant and Dow component said that quarterly revenues would land at the high end of its prior target. 

Wal-Mart Stores Inc., the world's largest retailer, fell US$1.19, or about 2%, to US$58.89.  

Banc of America Securities cut the company to neutral from buy, saying “with the stock rapidly approaching our US$62 target, we don't see enough reason to maintain a buy rating on the stock.” 

Shares of Boeing Co fell after Senate Armed Services Committee chairman John Warner moved on Thursday to slash a controversial US Air Force plan to lease and then buy 100 Boeing 767s for US$22.4bil. Boeing shares fell 73 cents, or 1.9%, to US$37.16. 

Shares of used car dealer CarMax Inc dropped after it said new stores cut into sales at existing stores. CarMax fell US$2.30, or 6.1%, to US$35.44. – Reuters  

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