Friday, May 04, 2012
("US Stocks Tumble After Soft Monthly Jobs Report," at 12:19 p.m. EDT, misstated the winning streak in the third bullet point. The correct version follows:)
--Stocks fall after jobs data show economy added fewer jobs than expected last month
--Economy adds 115,000 jobs versus expectations for 168,000
--DJIA, S&P 500 set to snap two-week winning streak
By Chris Dieterich
OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--A softer-than-forecast reading from the jobs market drove stocks sharply lower and raised doubts about the firmness of the U.S. economic recovery.
The Dow Jones Industrial Average fell 162 points, or 1.2%, to 13044 in midday trading. The Standard & Poor's 500-stock index shed 21 points, or 1.5%, to 1370. Both benchmarks were set to break a two-week streak of gains. The Nasdaq Composite declined 57 points, or 1.9%, to 2966.
Energy and technology stocks spearheaded Friday's declines. All 30 Dow's components fell, with Bank of America, down 3.3%, and Cisco Systems, off 3%, declining most.
Kraft fell 0.5%, falling with the broader market, after blue-chip packaged-food company's first-quarter earnings and revenue both topped analysts' expectations, and the company backed its outlook for the year.
LinkedIn rallied 7.9% after reporting first-quarter earnings and revenue that beat estimates and raised its full-year revenue outlook. The professional-networking site unveiled plans to buy presentation service SlideShare through a cash-and-stock deal valued at about $119 million.
Stocks dropped lower after a Labor Department report showed the U.S. economy added fewer jobs than expected last month. Nonfarm payrolls grew by 115,000 in April, while economists surveyed by Dow Jones Newswires anticipated an increase of 168,000 jobs.
The unemployment rate ticked down a tenth of percentage point to 8.1%, versus expectations for the reading to remain flat at 8.2%, though some of the drop was due to people leaving the work force.
Should the trend continue, the Federal Reserve has said it could consider additional measures to stimulate the economy. "If unemployment looks like it's no longer making progress, that will be an important consideration in thinking about policy options," said Fed Chairman Ben Bernanke last week.
"The implication of the jobs report is near-term weakness [in stocks], but there's floor because Ben Bernanke could be there to flood the system with money. That's the psychology that's imbedded in the market," said Paul Simon, chief investment officer of Tactical Allocation Group in Birmingham, Mich.
European stocks declined after a measure of private-sector business activity in the euro zone declined at a faster than expected in April. The Stoxx Europe 600 fell 1.8%, as losses widened following the U.S. labor report.
Asian markets were mostly lower, with Hong Kong's Hang Seng and Australia's S&P/ASX 200 both losing 0.8%. China's Shanghai Composite bucked the trend with a 0.5% gain after the HSBC China services PMI rose to 54.1 in April from 49.9 in March.
Crude-oil futures shed 4.4% to $98.04 a barrel, while gold futures rose 0.3% to $1,638 a troy ounce. The U.S. dollar fell against the euro and the yen. Yields on the benchmark 10-year U.S. Treasury bond fell to 1.884%.
In corporate news, GeoEye, up 1%, went public with its aims to acquire fellow satellite-imagery company DigitalGlobe, up 14%, revealing it has made a "friendly" offer to the company to acquire it in a $792.3 million cash-and-stock deal.
Estee Lauder shares slipped 4.5% after the company reported fiscal-third quarter adjusted earnings that topped estimates, but provided a fourth-quarter earnings outlook that was below expectations.
Synergy Pharmaceuticals slumped 21% after the developer of drugs to treat gastrointestinal disorders said it priced a public offering of 10 million shares of common stock at $4.50 a share, which was below Thursday's closing price of $5.69.
-By Chris Dieterich, Dow Jones Newswires; 212-416-2611; christopher.dieterich@dowjones.com
(END) Dow Jones Newswires
May 04, 2012 13:16 ET (17:16 GMT)
