Stocks slide ahead of unemployment report

Facebook's IPO may value the company at as much as $96 billion. The Dow falls 62. Energy shares lag the market. Growth in the services sector is slowing. Jobless claims fall. Green Mountain Coffee shares are crushed.

By Charley Blaine May 3, 2012 2:37PM

Charley BlaineUpdated: 6:48 p.m. ET

 

Stocks struggled today as a disappointing report on the non-manufacturing economy offset relatively decent news on initial jobless claims.

But the market was really marking time until Friday morning when the Labor Department releases its April report on nonfarm payrolls and the U.S. unemployment rate. The report, due at 8:30 a.m. ET, is expected to show the economy added 160,000 jobs in April. The unemployment rate is expected to hold at 8.2%, the rate reported for March.

The market saw some extremes. Whole Foods Market (WFM) hit an all-time intraday high of $90.71 before slipping back to $90.69, up $6.38. The stock was the top performer in the Standard & Poor's 500 Index ($INX) and the Nasdaq-100 Index ($NDX). But GreenMountain Coffee Roasters' (GMCR) shares plunged $23.65 to $25.87 after guiding lower for its fiscal third and fourth quarters.


Just before the close, Facebook said in a Securities and Exchange Commission filing that it expects to sell about 337 million shares at $28 to $35 a share. That implies a valuation for the company of $77 billion to $96 billion, a bit lighter than expected, The Wall Street Journal said.

The Dow Jones industrials ($INDU) closed down down 62 points to 13,207; the blue chips had been down as many as 91 points. The S&P 500 was off 11 points to 1,392. The NasdaqComposite Index ($COMPX) dropped 36 points to 3,024, and the Nasdaq-100 fell 30 points to 2,705.

Article continues below. 

Shares of American International Group (AIG), the insurance giant that is 70% owned by the U.S. government, fell 16 cents to $34.30 after hours from a regular close of $34.14. The company said it earned $3.21 billion, or $1.71 a share, up from $1.3 billion, or 31 cents, a year earlier, when the insurer booked charges related to paying back a Federal Reserve credit line. Operating income of $1.65 a share beat the Street estimate of $1.13.

The company hopes to have the government exit its position by the end of 2013.

LinkedIn (LNKD) shares were up more than 8% after hours to $118.35 from a regular close of $109.41. The company earned 15 cents a share, better than the Street estimate of 9 cents. Revenue was up 101% from a year ago to $188.5 million, beating the Street estimate by $9.9 billion. The company also raised guidance for the second quarter and the year.

ISM Services report disappoints
The market took its cue today from the  Institute for Supply Management's non-manufacturing index for April. The index, which measures activity in service industries, fell to 53.5 for April, the weakest reading of the year, from 56 in March. Economists estimated the index to come in at 55.5 for April. A reading above 50 implies expansion.

Meanwhile, initial jobless claims fell to a seasonally adjusted 365,000 from a revised 392,000 the week before, the Labor Department said. That offered a little cheer.

European stocks were basically flat, but there were still big worries about Spain's debt problems and the health of the continent overall. As a result, the dollar was higher against major currencies. That depressed commodities such as light sweet crude oil (-CL) in New York and gold (-GC).

Crude oil settled down $2.68 to $102.54 a barrel in New York. Brent crude was down $2.07 to $116.13 a barrel. AAA's Daily Fuel Gauge Report put the national average price of unleaded gasoline at $3.803, unchanged from Wednesday.

Gold settled down $19.20 to $1,634.80 an ounce. Silver (-SI) was off 63.5 cents to $30.01 an ounce.

The 10-year Treasury yield ended the day at 1.924%, up from 1.922% on Wednesday.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$102.54

$105.22

-2.22%

3.75%
(per barrel)











Heating oil (-HO)

$3.0869

$3.1425

-3.06%

5.93%
(per gallon)











Natural gas (-NG)

$2.3400

$2.2530

2.41%

-21.71%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.0500

$3.0757

-2.39%

14.77%
(per gallon)











Brent crude 

$116.08

$118.20

-2.89%

8.10%
(per barrel)











Retail gasoline

$3.8030

$3.8030

-0.34%

16.09%
(per gallon; AAA)












Energy, ISM and retail sales weigh on stocks
Aside from the tensions buildings over Friday's jobs report, three forces were pushing stocks lower.
  • Lower oil prices were hitting energy stocks. Declines in shares of Chevron (CVX) and Exxon Mobil (XOM) accounted for 12 points of the Dow's loss.
  • The ISM Non-Manufacturing Index for April suggested some weakness in employment. That was unlike the ISM Manufacturing Index for April, released on Tuesday, which showed strength in employment.
  • Mixed sales reports for April from major retailers. Costco Wholesale (COST) reported a 4% sales gain for stores open for a year; analysts had been expected a 5.1% gain. Macy's (M) said sales were up 1.2%, compared with the 1.9% consensus estimate.
Easter may have distorted April retail sales
The disappointing retail results follow two consecutive months of strong sales that were boosted by positive economic news about the jobs and housing markets.


"The economy is growing in fits and starts, and we are seeing sales shoot up and down,"  Michae Niemira, chief economist at the International Council of Shopping Centers, told The Associated Press. "We're in a choppy period."


An average of April's results for 22 retailers rose 0.6% -- the worst performance since November 2009 when the tally was down 0.2%, according to the International Council of Shopping Centers. The recession officially ended in June 2009. That's in stark contrast to February and March when the group posted an average 4.1% sales gain on signs the housing and jobs markets were improving.


Easter, which usually produces an uptick in sales, was in early April and probably pushed some sales into March. 


Not everyone posted worst-than-expected results. TJX Companies (TJX), which runs Marshalls, T.J. Maxx and HomeGoods, reported that revenue at stores open at least a year rose 6% in April, topping Wall Street's forecast of a 4%, the AP reported. The company also boosted its first-quarter and fiscal 2013 earnings outlooks. Shares fell 8 cents, however, to $42.45.


A day that bulls would rather forget

Only seven of the 30 Dow stocks were higher today, led by Procter & Gamble (PG), up 53 cents to $64.51, and Walt Disney (DIS), up 27 cents to $43.81. The laggards were Hewlett-Packard (HPQ), down 77 cents to $24.48, and Bank of America (BAC), down 16 cents to $8.


Whole Foods was followed at the top of the S&P 500 index by Scripps Networks Interactive (SNI), up $3.79 to $54.53, and data-storage company Teradata (TDC), up $4.95 to $77.14 after boosting revenue and earnings guidance for the year. The laggards were Prudential Financial (PRU), down $6.13 to $54.81, and Cablevision Systems (CVC), down $1.16 to $13.54. A total of 86 stocks in the index were higher.


Whole Foods, Google (GOOG) and Dell (DELL) were the only winners among Nasdaq-100 stocks. Green Mountain Coffee, Netflix (NFLX) and Sears Holdings (SHLD) were the laggards.


Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%  0.080%

-11.11%  700.00%
5-year Treasury note 

0.817%  0.819%

0.74%  -1.57%
10-year Treasury note

1.924%  1.922%

0.47%  2.83%
30-year Treasury bond

3.112%  3.114%

0.10%  7.72%
Currencies











U.S. Dollar Index

79.293  79.201  0.56%  -1.53%
British pound

1.6189  1.6205  -0.32%  4.19%
(in U.S. $)

          
U.S. $ in pounds

£0.618  £0.617  0.32%  -4.02%
Euro in dollars

$1.32  $1.32  -0.70%  1.53%
(in U.S. $)

          
U.S. $ in euros

€ 0.760  € 0.760  0.70%  -1.50%
U.S. $ in yen 

80.39  80.12  0.48%   4.26%
U.S. $ in Chinese

6.33  6.27  0.44%  0.04%
yuan

            
Canada dollar

$1.012  $1.014  -0.15%  3.13%
(in U.S. $)

          
U.S. dollar 

$0.989  $0.986  0.16%  -3.04%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,634.80

$1,654.00

-1.77%

4.34%
(per troy ounce)











Copper (-HG)

$3.736

$3.787

-2.44%

8.73%
(per pound)











Silver (-SI)

$30.0100

$30.6450

-3.24%

7.50%
(per troy ounce)











Wheat (-ZW)

$6.1550

$6.1450

-5.96%

-5.71%
(per bushel)











Corn (-ZC)

$6.1450

$6.115

-3.11%

-4.95%
(per bushel)











Cotton 

$0.8921

0.8951

-0.21%

-2.69%
(per pound)











Coffee

$1.7580

1.8275

-2.09%

-23.45%
(per pound)











Crude oil (-CL)

$102.54

$105.22

-2.22%

3.75%
(per barrel)










 
88Comments
May 3, 2012 4:14PM
avatar
Wiscbob...

Why does Wall Street need to be reigned in?  Are they doing something illegal, or just reacting to government regulations that drive up costs by voting with their feet?

When government drove up the cost of hiring American workers, companies moved offshore.  Nothing illegal, unethical or immoral there.  Why did a company like Apple move 100% of it's manufacturing overseas?  

Perhaps we need to SHRINK government involvement in  the business world.  How about this for starters.  No company employing less than 12 people needs to file any government paperwork besides tax returns and required permits?  

Wall Street didn't create the housing mess.  The government did by pushing for lower and lower margin requirements, until the lenders didn't want the risk associated with the loans.
The whole mess could have been avoided by pulling the plug on Freddie and Fannie, and the FDIC could have made a simple regulation requiring 20% margin at any time.

As long as this extreme anti-business environment exists, I doubt much can be done to turn things around.   Its all about cause and effect.   I note that small business formation hit a 3 year record low this month.  This does not bode well for the future.  Maybe we should be asking ourselves why that is?
May 3, 2012 4:43PM
avatar

I have this image of Wall Street tycoons driving down 8th avenue in a gas guzzling SUV, throwing banana peels out of there windows, smoking Cuban cigars lit with $100 bills.

 

And there bumper sticker reads, "If you don't like capitalism, go work at the White House."

May 3, 2012 3:06PM
avatar

The jobless rate is "expected" to hold @ 8.2%   Of course, it will!   Do not be surprised with all this 'positive' data we have been getting courtesy of MNSBC...that it does not tick down!  Is this 'dripping sarcasm' at its best!  Nothing on their blogs here could be more obvious!   Send me my 'entitlement' check and vote O'Bama in.  Damn, this is funny!  I will be fodder for the 'ideologues', today!  The 'markets' mean absolutament nada!

May 3, 2012 3:10PM
avatar

What?!?!?  Earlier on good ole, liberal MSNBC,  I read that stocks were failing modestly on "great" jobs news?!?!?   Now in the financial section it's "relatively decent".  LMFAO!! 

 

Liberals.  God love em!! LOLOLOL!

May 3, 2012 3:13PM
avatar
It is time big oil had some pain, but OPEC still controls price, Until we have an energy policy that is a real threat they will keep it high, trans Alaska Pipeline was built on $14 oil we need to drill and expand refineries, every way possible shale, wind solar, hydro
May 3, 2012 10:31PM
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We all know that actual unemployment, the U6 rate, is over 14% as it is trending more than 6% above the U3 rate (the traditional rate we hear about in the news).  Historically the U6 rate has always been approximately 2% above the U3 rate but it has ballooned due to the sheer number of people who have stopped looking for employment.  So, if the lamestream media would actually report the truth, (e.g. the "real" unemployment level), Barry and Michelle would be treading water.  As it is, the media is propping up the charlatan who is now peddling the new and  improved snake oil of "forward" (towards what, Marixism?), which replaces the ineffective but feel good bottle of "hope and change" the the lemmings bought into hook, line and sinker four years ago.  An old axiom that  anyone with any modicum of intelligence should follow is:  "Fool me once,shame on me, fool me twice.........".  Alas, far too many of the libs are illiterate and only want to line up for more of that "Obama money"......
May 3, 2012 3:55PM
avatar
I see Michelle Obama's face all over the internet now with a little slogan for the president's re-election, tell Barak you're in. Can't get away from political stuff anywhere! At home it's non-stop robo calls. They come at all hours of the day and night. Of course here in southeast Wisconsin we have recall elections going on and both parties want to know how you will vote. I just don't like all the dishonesty in politics.
May 3, 2012 3:22PM
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Yes, and what is the main cause that unemployment numbers are down????  Is it because their benefits have stopped?  When will we get the whole story instead of bits and pieces???
May 3, 2012 3:44PM
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Job claims falling in this economy is good news?  Sorry, but that tells me that more people have stopped looking for jobs.
May 3, 2012 3:56PM
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ha, duff, let,s not take this to " personal " we are just on here to try to fix the problem's, of the world.

 

I apologize.  It's just frustrating that people complain so much about the markets but don't take the time to learn what moves them on a daily basis.  Its easier to call it a rigged game than to do some reading and learn what actually agitates the market in one direction or another.

 

And frankly, unless you're a day trader, these daily ups and downs mean nothing to an investor...it's the broader trends (upward or downward) that matter.  

May 3, 2012 3:33PM
avatar

Yes, and what is the main cause that unemployment numbers are down???? Is it because their benefits have stopped?

 

The weekly claims numbers are initial claims.  Benefit expiration has nothing to do with these numbers.  Why does this have to be explained every week?  And even worse, you get 8 "thumbs up" for a factually incorrect post.  Unbelievable...well, not really.

May 3, 2012 5:52PM
avatar
Oil goes down over $2 today, and no movement at the pump downward.  Went up to $106/barrel a few days ago, and the prices at the pump jumped 30 cents in one day here in the Chicago Burbs Angry
May 3, 2012 10:39PM
avatar

Jetski lover... it's 05/01...  That mean summer formula gasoline as mandated by the EPA...it increase around .20-.25 every year because of this...  Get rid of summer formula, or live in an area where it is not needed.

 

Or better yet, GET RID of as many Donkeys as possible including the clueless '57 states'...

May 3, 2012 3:29PM
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I think the so called analysts get their info from a fortune cookie.  Yesterday things looked good & today they stink.  How can the economy & jobs change so much in a matter of a day....unless, the Speculators & Manipulators are doing what they do best & that is screwing the public!!!
May 3, 2012 3:28PM
avatar

you say stocks are off because of a disappointing report on non-manufacturing . . . please tell me who's report . . . that is a new one to add to Euorpean debt crisis, China's economy, Iran, Spain, the list goes on. It seems like there is someone out there that just loves to see the market go up and down. I wonder why?

May 3, 2012 3:19PM
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And do they really care about the people who are trying to make ends meet with them constantly raising the price of oil and gas????  I DON"T THINK SO!!!!  Put that in your pipe and smoke it!!!!!!!!!!!!!!!!
May 3, 2012 7:06PM
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Max Sparticus ( a great Marxist name BTW)...

 

You can buy all the GM crap you want.  I won't touch a government motors car or truck again.  GM makes crap.  The engineering isn't that bad, but the quality of assembly remains abysmal.

 

As I said beofre people are what worth what the person(s) with the cash are willing to pay.  In the case of unionized workers, you get a substandard poor labor product along with bad atitudes...  no thanks, you hire these lazy problem workers...

 

I'd close and leave if presented with a union...  I can always open somewhere else.

 

As I said, if you don't like the CEO's salary, buy shares and vote them.  Or better yet compete for the CEO job...  Just tell the board you believe in socialistic ideas, Obamanomics, and see what they tell you... Another option is for you to start your own company.  You can run it anyway you want.

May 3, 2012 3:49PM
avatar

dennis duffy, you must work for the writer,s on here , i see you know how to spell well

 

No, but I actually went to school and paid attention.  A novel concept, no?  If you're too lazy to use the language properly, you're probably too lazy to articulate an informed opinion.

May 3, 2012 4:21PM
avatar
Max Sparticus....

Maybe Occidental's share holders think he is worth the money.  If you are a shareholder and don't like what he EARNS, then vote your shares accordingly.  If you think you can do the job, by all means apply.  If you are not a shareholder, PLEASE mind your own damn business.  If you don't like the prices of our products, by all means buy from a competitor...

Maybe you don't like what big league ball players make, or movie stars, or other entertainers.  Maybe you think Oprah is vastly overpaid...  People are worth what someone else is WILLING to pay them.

Personally if you make more than minimum wage I think you are overpaid...
May 3, 2012 3:48PM
avatar

Job claims falling in this economy is good news? Sorry, but that tells me that more people have stopped looking for jobs.

 

Initial jobless claims, and that means that fewer people were fired/laid off and fewer people were seeking first time unemployment claims.

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