Stocks retreat after brief bump from jobs report
The economy adds 117,000 jobs, and the unemployment rate dips to 9.1%. But global slowdown fears persist. Global markets sink as European leaders meet to discuss the debt crisis.
By Melinda Peer, TheStreet
Updated at 12:25 p.m.
Stocks extended losses Friday after the previous session’s rout as investors remained concerned about stagnant economic growth despite signs that the U.S. labor market is improving.
The Dow Jones Industrial Average ($INDU) was down by 43.2 points, or 0.3%, at 11,340. The S&P 500 ($INX) was lower by 11.4 points, or 0.9%, at 1,188, and the Nasdaq ($COMPX) was shedding 41.1 points, or 1.6%, at 2,515.
Signs of improvement in the jobs market helped stocks regain some ground after plummeting roughly 5% on Thursday but it wasn’t enough to negate continued ambiguity on how Europe will prevent its debt crisis from spreading to Italy and Spain.
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Earlier this week, Automatic Data Processing said companies added 114,000 jobs in July.
French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to discuss the European Central Bank's recent decision to offer more money to banks and extend current liquidity measures through the end of 2011 on Friday. The decision, which wasn't well-received by Germany, represents the ECB's latest effort to contain its debt crisis. It failed to calm the market, however, since the ECB purchased Irish and Portuguese bonds, but not Italian bonds, according to a Bloomberg report.
The FTSE in London was shedding 1.9% and the DAX in Frankfurt was declining 2.4%. Hong Kong's Hang Seng sunk 4.3% and Japan's Nikkei lost 3.7%.
Conglomerates were putting in the strongest performance with Procter & Gamble (PG) and 3M (MMM) trading near the top of the Dow. Kraft Foods (KFT), which announced that it would split into two separate businesses on Thursday, was the Dow’s best-performing stock.
Procter & Gamble (PG) topped analysts' quarterly profit expectations by 2 cents with earnings of 84 cents a share. Sales of $20.86 billion also surpassed projections for revenue of $20.6 billion. The stock, however, was slipping 0.1% to $59.50.
Energy stocks were holding the biggest declines although Microsoft (MSFT), Alcoa (AA) and Caterpillar (CAT) were the Dow’s biggest laggards.
Market breadth was once again negative with 75% of the 1.9 billion shares trading on the New York Stock Exchange falling while only 23% were rising. There were 917 million stocks changing hands on the Nasdaq.
Commodities were getting some support on a weaker U.S. dollar.
The September crude oil contract was gaining 24 cents to trade at $86.87 a barrel. Gold for December delivery was up by $1.10 at $1,660.10 an ounce.
The dollar weakened against a basket of currencies, with the dollar index down by 0.7%.
The benchmark 10-year Treasury fell 28/32, lifting the yield to 2.498%.
LinkedIn (LNKD) saw its stock jumpearly in the session after the business social-networking company reported a surprise profit in its first quarter as a public company late Thursday. The stock was down 7.5% at $88.33.
Media giant Viacom (VIA) reported better-than-expected third-quarter results with adjusted earnings of 99 cents a share on revenue of $3.77 billion. Analysts had been anticipating a profit of 86 cents a share on revenue of $3.52 billion. Shares were down 1.6% to $50.50.
Insurer AIG (AIG) swung to a profit in the second-quarter, reporting earnings of 69 cents a share. Wall Street had been calling for a profit of 92 cents a share. The stock was losing 5.6% to $24.91.
At 3 p.m. ET, the Federal Reserve Board will release its consumer credit report for June. The report, considered a gauge of future spending, is expected to show that consumer credit fell to $5 billion in June from $5.08 billion in May.
And now onto my rant of the day...IMO, the biggest problem with our country as a whole today is that as a society, we are constantly looking for the easy-way out. Perhaps this started with the baby boomers, but regardless of who started it, it's become a way of life. Instead of teaching Johnny to read, we take the easy way out and just promote him to the 8th grade regardless. Instead of making hard fiscal choices, we just borrow or print more money. Instead of learning about candidates and thinking for ourselves, we just pull the lever for the (R) or the (D). Instead of sticking to our principles, we constantly make exceptions and excuses to justify our inconsistent behavior. Instead of having an honest debate, we resort to name-calling. Instead of working to solve a problem, we just throw more money at it. Instead of being independent and self-reliant, we've become dependent and lazy, because it's easier. Instead of taking responsibility for our behavior or choices, we blame society or our environment. Instead of holding people's feet to the fire (banksters, politicians, etc...), we just give them a pass. Instead of honoring our contractual obligations, we demand that the rules be rewritten or just walk away from our obligations. Instead of saving up to purchase something, we just buy it on credit and worry about paying for it later. Instead of thinking critically, we just regurgitate what some talking head said on the radio or on TV. Instead of actually funding a pension plan, we just kick the can down the road and figure the money will eventually come from somewhere. Instead of spending time taking care of the stuff we have, we abuse our things and just go buy another one when the first one breaks.
This relatively new tendency to take the easy way out has become prevalent throughout our society, and it's going to be our downfall.
Being one of the Baby Boomers, I don't think your description fits my age group very well, but I appreciate your disclaimer! . As kids, most of us who wanted something more than toys and clothes had to buy it ourselves, and had to be fairly industrious. We collected pop-bottles, mowed lawns, shoveled sidewalks, and a lucky few had a paper route to scrape enough cash together to buy our first bicycle or save for that car. We were raised by elders who where experienced in, or at least were children, during the Great (well maybe not anymore) depression. We got spanked in school, paid for broken windows out of our own pockets, and appreciate the sometimes harsh guidance; excellent training for real life!
Today, most all of us 'older folk' own our own homes, don't care much for Credit Cards, and fight our own battles. Actually, we are a very independent lot, mostly self made individuals not afraid to tackle life's challenges, and are grateful to have a roof and 4-squares that we have earned ourselves. Most of us are too proud to take a handout from the Government, but will roll up our sleeves to help each other out without keeping score. Around coffee we discuss the progression of the erosion that has occurred over the last 50 years or so, and how much people and the world has changed, and not for the better.
But sadly, modern society sees us as stubborn old fossils, with little to contribute unless someone needs a handout, place to live, or help fixing something. Otherwise we are just wrinkly broken down old-timers who don't even know how to text, set up a Facebook account, swing a Credit Card, or know who got voted off Idol. Yea, I pay for most everything with cash; if I don't have the $$$, I don't buy it, and my phone still hangs on the wall in the kitchen. But much of these antiquated principles and values we live by are spurned; elders are no longer respected, and wisdom can be found in one of the 20,000 apps at your fingertips. Go to coffee with someone over 50, and if you listen carefully, may learn something about being a proud American, and being responsible for our country and society, and not just ourselves.
Sure, there are plenty of oldsters that have went awry (usually the victims of money greed), but for the most part Boomers have much more to offer than they are given the opportunity to share. Seems most of 'us' agree that the world needs a kick in the pants, and hope trying times like we are now experiencing, gets people off their butts and take action against this downward spiral.
I personally feel, it's time to start from scratch. At election time, out with the old.....in with the new. It's high time to vote in new incumbents, not by whether they are Democrat, Republican or whatever. I will vote them in, as an individual. I want to know as much as possible, about each person I am voting in. I need to take on the responsibility of educating myself. It all starts here. I can't change much in the Government now, but I can make changes in my own lifestyle. Imagine the impact this would make on the economy, if each individual did the same. I can only speak for myself, but I will make an attempt to make the best economical changes in my family to help us survive. I hope you will make an attempt to do the same.
After reading the “news” in the Ministry of Propaganda and witnessing the stupidity of the US government, the rest of the world is struck dumbfounded by the immaturity of the “world’s only uperpower.”
What kind of superpower is it, the world wonders, that is willing to go to the eleventh hour to convince the world, which holds its banking reserves in US Treasury debt, that the US government will default on the debt?
Every country in the world now worries about the judgment and sanity of the country with the largest nuclear arsenal in the world.
This is the achievement of the Republicans, who took an ordinary commonplace increase in the debt ceiling limit, an event that has occurred routinely many times over the course of my life, and turned it into a crisis threatening the world financial system.
To be clear, there was never any risk whatsoever of US default as President Obama has power established by President George W. Bush’s Presidential Directive 51 to declare default a National Emergency and to set aside the debt ceiling limit and Congress’ power of the purse, and to continue to issue the debt necessary to fund the US government and its wars.
That the American press ever took this highly-hyped “crisis” seriously merely demonstrates their prostitute status.
The US public debt is rising too rapidly against US GDP, although it is still below the percentages during World War II. The problem that is ignored by the idiots in Washington and the presstitutes is that the debt is rising relative to the economy because the economy is not rising, but war expenditures are.
Why is the economy not rising?
It is not rising, because it has been offshored. What formerly was US GDP produced in Gary, Indiana, St. Louis, Detroit, Silicon Valley, and other US
locations is now GDP for China, India, Indonesia and other countries where manufacturing labor and professional services can be hired below US rates.
What happens with offshoring? The answer is clear. US GDP, consumer income, career opportunities, and tax base leave the country. Corporate profits and bonuses rise due to the lower labor costs.
Who is this good for?
The answer is that it is only good for Wall Street, corporate shareholders, and corporate management. Their incomes go up, and the GDP goes down along with the employment opportunities of Americans and the tax base for government.
The other destroyer of American economic prospects was the deregulation of the financial sector. Economists theorized that markets were self-regulating and created the illusion that greed was never a problem. This was music and dollars to Wall Street’s ears. Federal Reserve Chairman Alan Greenspan and the Wall Street-owned US Treasury jumped on board. Those, who like Brooksley Born, were empowered by US law to regulate derivatives, were driven out of office by the Federal Reserve Chairman, the US Treasury Secretary, and the Securities and Exchange Chairman.
Financial institutions freed from Glass-Steagall, freed from capital requirements, and freed from oversight, immediately took debt leverage on highly unrealistic bets to amazing heights. When the schemes collapsed, the Federal Reserve lent US and foreign banks $16.1 trillion dollars, a sum larger than the US national debt and larger than the US GDP.
Where did the Federal Reserve get $16.1 trillion to lend? The Fed created it out of thin air with a stroke of a computer entry.
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge Tax
Social Security Tax
Road Usage Tax
Recreational Vehicle Tax
Sales Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Nonrecurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
@Nicodemus46:
You are so right brother!! Now Fanny Mae wants another 5.x Billion to help with the 09 bad loans. When does it end?? WE NEVER should have bailed anyone out, Auto, Banks or Fanny/Freddie. If they would have broken then another will rise from their ashes without our help. Banks caused the problem they should have fixed on their dime not ours. Then we give them 100 pennies on the dollar WTF. And then they tighten their belts and won't lend any back to us... IT'S OUR MONEY!!!!! It was so nice of us to pay them to screw us. TWICE! Screw me once shame on you, screw me twice shame on me!!! And with all the lobbying and special interest B.S. our Government is corrupt beyond belief and it doesn't matter what party they are in. We need to be able to vote for the people that can do the best job for WE THE PEOPLE not follow a party playbook.
Hey JUJU - wake up...
These entitlements aren't FREE! I am a TAXPAYER and I was 'forced' to contribute to the unemployment fund, the social security fund, and all the other funds. Money has been deducted from my hard-earned paycheck every week and every year so the government could fund these programs WITH THE PROMISE and UNDERSTANDING that I would get some of it back (social security retirement fund, medicare, etc).
Why the heck would I ever want to have anyone take money away from me with a promise to give it back - only to have them keep it, squander it on things I disagree with or give it to NON citizens?
It's time to SAY ENOUGH is ENOUGH. Get out of my life if you can't keep your word;!
I must heartily agree with Brutus. We have all gotten complacent, lazy, and greedy. We are Spoiled Rotten, and I write that with capitals purposely. How many people get food stamps or housing assistance--or even their Social Security check--and don't really HAVE to have it? But we think we should get "everything we're entitled to." I don't knock these programs--gosh, there have been times I really needed help myself, and I had to go get it--but they are for people who really, REALLY need help, people who are hungry, or homeless, or mentally ill, or wiped out by a flood or illness or old age.
There have been times when I qualified for something but didn't get it. Why on earth would anyone turn down free food or other assistance to which they are entitled? Because THEY CAN GET BY and leave more for people who really desperately need it. It's called pride. It's called independence. It's called integrity to not take more from a common pot than you must. I have to say there has been a dramatic shift during my lifetime: It used to be considered shameful to have to get food stamps or other welfare, but now it's an "entitlement."
Shame on us as a people!!! Those of us who are ABLE to stand on our own two feet should do exactly that. And those who could help with the current crisis by standing on their own two feet should do that now.
In addition, those who could help with the current crisis by contributing more of their expendable income (the wealthy, for those who don't get it) should do that now.
We're in trouble, people, and whining about it won't help at all. We have to stand up straight, suck it up, and do whatever we must to set things right, even though it means tightening our belts and doing without for a while. It's time.
MT - not sure why you're slamming Brutus. He didn't even mention the President in his post. Actually Brutus painted a very vivid picture of how we got to where we are today and I am in full agreement of his post.
Brutus - you hit the nail on the head with your post. Too many people nowadays look for the easy way out and they are never at fault anymore. It's always someone's else fault. It's pathetic. Whatever happened to personal responsibility? Oops... did I just say a dirty word?
The unemployment rate is 9.1% , and the Obama spin masters can muster the guts to call this positive news. REALLY !!!
"Despite today’s better than expected number, the economy clearly downshifted in the spring and summer but we continue to believe that a pickup in economic activity will materialize in the second half of the year. But to put this in perspective, it is a sorry state of affairs when 117K total jobs created in any given month is cheered enthusiastically by markets. How the mighty have fallen." - Dan Greenhaus of BTIG
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