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After the Close - Just when it was looking like the bulls were going to hold their ground in the holiday-shortened trading week, despite a series of disappointing economic reports, the bears made a bold statement today, emboldened by another dour report on the U.S. labor market (more below). The selling was brisk at the onset of trading and even intensified as the day progressed before some late modest bargain hunting ensued. By the closing the bell, the damage was seen in setbacks of 124, 39, and 13 points for the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index, respectively. In another light volume day—as many traders took extended vacations around the July 4th festivities—declining issues outnumbered advancers by a sizable margin on both the Big Board and the NASDAQ.

As noted, the primary impetus behind today’s selloff was another disconcerting report on U.S. labor market conditions. At 8:30 A.M. (EDT), the Department of Labor reported that the nation added 80,000 non-farm payrolls in June, which was below the consensus expectation of about 100,000 jobs and only marginally above the revised May figure of 77,000 positions. Investors did not appear to like the insufficient progress that has been made on the job-creation front in recent months—and in response bid equities lower. Indeed, the current rate of job growth remains well below the desired monthly level (about 200,000 positions) needed to make a significant dent in the nation’s unemployment rate, which remains stubbornly high at 8.2%.

Not surprisingly, those sectors most closely tied to the health of economy performed poorly today. The jobs report, along with disappointing data on manufacturing and non-manufacturing activity earlier in the week, has unnerved investors. Among the biggest laggards were the basic materials, technology, energy, and industrial sectors. Within the basic materials and energy areas, the stocks of metals and mining, steel, and oil companies were notably weaker. In the technology space, shares of industry giants Apple (AAPL), Google (GOOG), Microsoft (MSFT), International Business Machines (IBM Free IBM Stock Report), and Cisco Systems (CSCO Free Cisco Stock Report) were all in the red.

The selling was not confined to just equities, as certain commodities were also notably weaker. The two most closely watched ones (oil and gold) were down sharply, owing to the aforementioned employment concerns.  They were joined in negative territory by contracts for cocoa, coffee, and corn. Conversely, most of the agricultural, soft, and livestock futures finished the latest session higher.

Meanwhile, demand for fixed-income instruments spiked today after the release of the dour employment figures. The yield on the benchmark 10-year Treasury note, which moves in the opposite direction to the price, who fell. Our sense is that investors are not likely to veer too much from their “flight-to-quality” strategy until U.S. economic data improves and/or more definitive actions to resolve the euro zone’s sovereign-debt problems are put in place. The European Union did take some steps in that direction since the summit of European leaders concluded last week—the ECB cut lending rates earlier this week.

Looking ahead to next week, second-quarter earnings season officially kicks off on Monday when Alcoa (AA Free Alcoa Stock Report) releases its latest quarterly results. The aluminum giant will be joined by fellow Dow-30 member JPMorgan Chase (JPM Free JPMorgan Stock Report), which is scheduled to release results next Friday. Still, other than those two heavyweights, earnings news will be sparse until the following week. The news on the economic front will also be light, with the only notable data due on the trade gap (Wednesday) and producer (wholesale) prices (Friday). However, the investment community will likely be paying close attention to the minutes from the latest Federal Open Market Committee meeting, which is to be released shortly after 2:00 P.M. (EDT) on Wednesday.  - William G. Ferguson     

  At the time this article was written, the author did not have positions in any of the companies mentioned

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12:30 PM ET - Stocks are selling off today on a disappointing employment report. Word that the U.S. added only 80,000 positions in June, when 100,000 were expected, sent equities into a tailspin at the opening bell. Just after noontime on the East Coast, the Dow Jones Industrial Average was still off 184 points and the NASDAQ was down 49 points, or somewhat greater on a percentage basis than the Dow’s drop. The weakness is widespread, with decliners outpacing advancers by a three to one margin on the New York Stock Exchange.

All of the stock market’s ten sectors are lower, with technology stocks, hurt by a poor earnings forecast from software vendor Informatica (INFA), among the hardest hit. Shares of energy, materials, and industrial companies, groups that are seen as benefiting to a larger extent from economic growth, are also feeling the heat to a greater degree. Schlumberger (SLB), Baker Hughes (BHI), Boeing (BA - Free Boeing Stock Report), Emerson Electric (EMR), Alcoa (AA - Free Alcoa Stock Report) and Potash Corp. of Saskatchewan (POT) are some of the notable stocks in those sectors that are down.

In reality, the slow pace of job growth fits with the modest rate of expansion occurring stateside and the apparent recession in the European Union, but it is still frustrating. There are some indications that the tepid nature of the business recovery is evidence that we are not fully past the extreme disruption caused by the deep 2007-2009 recession. That view is supported by a continuation of the ultra-low interest-rate environment. The positive there is that the critically important housing sector is slowing getting back on its feet after a once unheard of national slump. Government agency Freddie Mac reported that rates on 30-year mortgages hit another low this week, at 3.62%. That is welcome news for anyone buying a home or refinancing their existing mortgage.

Ultimately, and possibly soon, stock market investors will look to the Federal Reserve to take action to stimulate the economy. Another round of bond-buying, known as quantitative easing, would probably have a good chance of reawakening the bulls. But central bank action needs to be accompanied by effective fiscal policy for it to do the most good. On that score, lawmakers in Washington aren’t likely to get much accomplished ahead of this year’s Presidential election. So the Fed may have to go it alone awhile longer.

Overall, today’s losses may be contained by the view gaining some traction that the Federal Reserve may act sooner rather than later. - Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned.

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10:40 AM ET - As we pass the one-hour mark in the trading day on Wall Street, the early optimism generated yesterday by a pair of encouraging reports on the U.S. employment situation has faded and rather abruptly.

In fact, the bad news today has more than offset the better tidings issued yesterday in which a report on private-sector payrolls had shown an addition of 176,000 jobs in June, while a government survey on new jobless cliams had indicated a decline in that politically sensitive metric for the latest week.

Specifically, earlier this morning Washington issued data showing that just 80,000 new payrolls were created last month--20,000 less than forecast--while the unemployment rate had held steady at 8.2%.

These latter numbers hit Wall Street hard, and as we pass the one-hour mark in trading today we find that the Dow Jones Industrial Average is now off by almost 150 points, bringing that index back below 12,800, just a day after it had been knocking on the door of 13,000. The Standard and Poor's 500 Index is off 14 points, while the tech-heavy NASDAQ is lower by 40 points. Losing issues hold a lead of better than four to one on both the Big Board and the NASDAQ, while the NYSE shows down volume overwhelming up volume by a plurality of almost 10 to 1. It is not a pretty morning by any stretch of the imagination.

Worse, potentially, is the fact that this is a low-volume Friday in the summer in which many traders are out because of vacations. There is thus the potential for a vacuum in trading, which can exaggerate movements later on in the afternoon. We aren't predicting such an event, just indicating that such Friday's can lead to wide swings in the averages late in the day.

As for why the market is lower, the evidence points to the employment report, which was bad enough to worry traders who now may see the dour trends in Europe having some effect over here. But the news, with job growth continuing may not have been bad
enough to get the Federal Reserve to attempt to further jump start the economy with any new dramatic initiatives just yet. - Harvey S. Katz, CFA 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Stocks to Watch from The Survey While today’s lackluster report on nonfarm payrolls will likely be in the forefront of investors' minds this morning, there are a few stocks that could see a particularly active session. Notably, shares of Informatica (INFA) are plunging in the premarket, after the provider of e-business infrastructure and analytical software reported preliminary second-quarter results that fell well short of its previous forecasts. Seagate Technology (STX), the world’s largest manufacturer of hard disk drives, also said that June-period sales would come in below plan, though this was due to an “isolated supplier quality issue.” Management went on to note that this issue has been resolved. Seagate stock is modestly lower in pre-market trading. Finally, shares of Pengrowth Energy (PGH) are trading sharply lower in the premarket, after the energy company cut its monthly cash dividend to Cdn $0.04 in an effort to preserve cash and maintain financial flexibility. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The stock market shed some earlier and hard fought modest gains late yesterday to close the session in the red, as nervousness ahead of this morning's report on employment and unemployment offset back-to-back decent reports on the jobs situation issued early yesterday morning. A disappointing report on non-manufacturing activity, which was the follow-up to an earlier issued survey on manufacturing activity that was even more disquieting, and uninspiring sales data from a number of the nation's major retailers, however, more than held the bulls in check. By the end of the day, the Dow Jones Industrial Average, off early then grudgingly higher later in the session, had finally closed in the red by 47 points. The NASDAQ, meantime, was flat, while the Standard and Poor's 500 Index dropped just over a handful of points.  Eight of the 10 major industries tracked by the S&P 500 fell on the day, led lower by the banks, which experienced some rather sharp individual reversals.

Here's a rundown: Three days after the Institute for Supply Management had released data showing that the manufacturing sector had surprisingly declined in June, that same group chimed in yesterday with a report showing that non-manufacturing activity, which takes in the services sector, had slowed its rate of growth last month, coming in with the lowest rate in the past 12 months, and at a barely expansionary pace of just over 52. A reading above 50 signals that this sector is growing. A survey result shy of 50 signals a contraction in this sector.

On a brighter note, the government reported that first-time unemployment claims had dipped in the latest week, which is a mildly encouraging result. That upbeat metric followed an encouraging report from Automatic Data Processing (ADP) on private-sector job creation. That survey indicated that the economy, according to ADP, had added 176,000 non-government jobs in the last month. Expectations had been for a smaller increase of 105,000 jobs.

By the end of the day, however, those employment reports were offset by lingering concerns about this morning's even more critical report from the U.S. government on non-farm payrolls and the jobless rate for June. Expectations had been that the nation added about 100,000 jobs last month and that the unemployment rate had held steady at 8.2%. These latter concerns, a sharp pullback in the shares of such banking behemoths as JPMorgan Chase (JPMFree JPMorgan Stock Report) and Bank of America (BACFree BofA Stock Report) combined to push stocks lower on the day, albeit modestly so.      

Now, just moments ago, the government issued its long-anticipated monthly employment report, and the results confirmed some of Wall Street's fears, although the job growth miss was modest, with the nation creating an estimated 80,000 new non-farm payrolls in June--20,000 below expectations, while the jobless rate held steady at 8.2%--as expected. Also, the May payroll figure was revised to show that 77,000 jobs were added that month, 8,000 more than originally estimated, while April's estimated addition was pared back from 77,000 to 68,000.

The U.S. equity futures, off just modestly before the report's issuance, fell back notably, with losses in the S&P 500 Index and the NASDAQ futures of nine and 15 points, respectively, presaging a lower opening for Wall Street when trading commences in about a half hour from now. – Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.