US Stocks Tumble After Jobs Report; Nasdaq Faces Year's Biggest Decline
05 May 2012 - 4:47AM
Dow Jones News
The Nasdaq was on course for its biggest decline of the year
after a worrying reading from the jobs market raised concerns about
the pace of U.S. economic growth and drove stocks lower.
The Nasdaq Composite slid 59 points, or 2%, to 2966, driving the
technology-heavy benchmark toward steepest weekly loss in since
December.
The Dow Jones Industrial Average fell 150 points, or 1.1%, to
13055, in afternoon trading on Friday. The Standard & Poor's
500-stock index shed 19 points, or 1.4%, to 1372. Both benchmarks
were set to post their biggest declines in a month.
All 30 of the Dow's components fell. Energy-sector stocks
including Chevron, down 2.4%, led the market lower as oil prices
fell below $100 a barrel for first time since February. Cisco
Systems lost 2.9% and J.P. Morgan Chase fell 2.3%.
Kraft Foods fell 0.5% with the broader market after the
blue-chip packaged-food company's first-quarter earnings and
revenue both topped analysts' expectations, and the company also
backed its outlook for the year.
LinkedIn rallied 7.3% after the company reported 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 rose 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 10th of a percentage point
to 8.1%, though some of the drop was due to people leaving the
workforce. Should the trend continue, the Federal Reserve has said
it could consider additional measures to stimulate the economy.
"It's really a continuation what we've seeing, and that's slow,
grinding gains in jobs growth," said Paul Simon, chief investment
officer of Tactical Allocation Group in Birmingham, Mich. "The
implication of the jobs report is near-term weakness [in stocks],
but there's a floor because Ben Bernanke could be there to flood
the system with money. That's the psychology that's embedded in the
market."
European stocks declined after a measure of private-sector
business activity in the euro zone declined at faster than expected
in April. The Stoxx Europe 600 fell 1.8%, as losses widened
following the U.S. labor report.
Traders are looking ahead to weekend elections in Europe, where
changes to the region's political dynamic could impact its response
to ongoing sovereign-debt issues. In particular focus is France's
presidential election. Polls show President Nicolas Sarkozy is
trailing Socialist contender Francois Hollande.
"It comes down to the fact that the economy is not improving as
some had thought, and earnings are winding down," said Rick Fier,
director of equity trading at Conifer Securities. "Europe is likely
to be at the forefront for the next couple of months, so it seems
that a more defensive posture might be warranted."
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 a purchasing
managers' index rose in April from the previous month.
Crude-oil prices shed 4.4%, to $98.10 a barrel, while gold
prices rose 0.5%, to $1,643 a troy ounce. The dollar fell against
the euro and the yen. The yield on the 10-year Treasury note fell
to a three-month low, trading recently at 1.886%.
In corporate news, GeoEye rose 5.6% as it went public with its
aims to acquire fellow satellite-imagery company DigitalGlobe,
which climbed 20%, disclosing it has made a "friendly" offer to the
company to acquire it in a $792.3 million cash-and-stock deal.
Estee Lauder slipped 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 had 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
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