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 TheStreet Staff Aug 5, 2011 7:34AM

Image: Wall Street sign (© Comstock Images/age fotostock)TheStreetBy 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.

 
"Be careful,” warned RealMoney contributor Rev Shark in a recent blog post. “We still have plenty of landmines to navigate, and the jobs report isn’t going to make them go away.”
 
The Labor Department said the U.S. economy added 117,000 jobs in July, exceeding the 84,000 economists had expected, according to Briefing.com. Additionally, June's payroll additions were revised up to 46,000 from an initially reported increase of 18,000. Companies added 154,000 payrolls in July, surpassing forecasts for growth of 100,000, and the unemployment rate fell to 9.1%, from 9.2% in June.
 
Hourly earnings rose 0.4% in July after remaining flat in June. Economists had anticipated only a 0.2% uptick. The average workweek remained unchanged at 34.3 hours.

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.

 
Shares of Priceline.com (PCLN) were surging 7.6% to $520.4 after the online travel company exceeded second-quarter expectations on 7% sales growth across its airline ticketing business and strength in its hotel and car rental bookings.

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.

444Comments
Aug 5, 2011 8:21AM
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Hopefully the jobs number comes in better than expected and surprises us all, but I'm not holding my breath.  Just to keep up with tradition, my official guesstimate is 55,000 net jobs created in July with the UE rate creeping up to 9.4%.

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.

Aug 5, 2011 9:37AM
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Brutus625,
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.

   

Aug 5, 2011 9:27AM
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Lets face it people, the stock market is a totally manipulated, inflated, criminal, playground for the rich to rob us saps who believe there is any integrity left in this fraudulent scheme, and the Government backs these shuysters who run it!

SmileSmileSmileSmileSmileSmileSmileSmileSmileSmile They rob us little folk with a smile!!
Aug 5, 2011 9:02AM
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The drop in the unemployment ,IS NOT" including all the good people of this country That have lost there unemployment,months and years ago. I would bet if they added them figures it would be more like 25%.- 30%,  This is the facts in todays world.
Aug 5, 2011 11:40AM
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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.

Aug 5, 2011 9:09AM
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The unemployment rates are NOT down.....start counting all of the individuals who have totally run out of benefits ---and in another matter thanks to the health insurance companies who just raised premiums AGAIN so that the cobra payments are more than i make in an entire month!
Aug 5, 2011 11:35AM
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The United States Government and its presstitute media have wasted time and energy creating hysteria over a non-existent “debt ceiling crisis.”

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.

Aug 5, 2011 11:34AM
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Not one of these taxes existed 100 years ago, and most are younger than 50. Some/All need revisited, as well as the programs and politicians they 'support:'

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
Aug 5, 2011 9:09AM
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I hope people don't believe that garbage that our economy is improving because the Gov't  does not want you to know the truth, you can look around and see that not too much has change and that the experts has told us that the economy is still weak ( lie , lie ,lie ) thats all they do.

Aug 5, 2011 11:50AM
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@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.

Aug 5, 2011 9:42AM
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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;!

Aug 5, 2011 8:51AM
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From what I can see they need to take the L out of BLS 

Aug 5, 2011 9:31AM
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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.

Aug 5, 2011 9:22AM
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Sadly, yesterday it was all gloom and doom because of the suspected bad jobs report today.  Today, the jobs report is not as bad as suspected and suddenly everything is all rosey?  These types of articles are part of the reason everything is so chaotic.  Just like Washington, these authors don't have a clue of what is really taking place.  They throw some dribble together, collect their check, and go home to smoke some more of that "no-name" stuff so they can come up with tomorrow's article.  It's the same stuff that Washington is smoking so at least they are all on the same page as they spout their dribble.
Aug 5, 2011 9:19AM
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So, did the jobless rate - that would never go above 9% - actually drop down to 9.1% OR is that just what they are saying today.  Later to be "revised".  Anyone that thinks anything is getting any better needs to get out of their ivory tower and come down the the real world - street level.  People are "underemployed", out of work, on massive welfare, and some are stealing anything and everything.  No water in almost 1/2 the country and heat over 95 everyday for months.  Cattle are being sold, crops drying up, it's gonna get BAD folks!
Aug 5, 2011 9:26AM
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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?

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The unemployment rate is 9.1% , and the Obama spin masters can muster the guts to  call this positive news. REALLY !!!

 

The real unadjusted unemployment rate is 9.3 percent they had to "adjust it" in order for it to show a drop. These are just made up numbers folks the real numbers are just too horrible to release to the public. Remember 46,000,000 plus Americans are on food stamps. Is this a good thing??? 



Aug 5, 2011 8:55AM
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The drop in the unemployment rate appears to be due to a drop in labor-force participation, according to market sources -- can't access the BLS site, still! -- so a 9.1% U-rate is not an unalloyed good. There will be pressure on it to rise again if/when people start to come back to the labor force to look for jobs"  - Mark Gongloff, WSJ
Aug 5, 2011 10:32AM
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Statistics, Lies, Damn Lies. Everyone knows how they manipulate the unemployment figures. One trick is to not count those who have not worked in 2+ years and no longer receive any unemployment benefits. The government just writes these folks off like they do not exist. Real unemployment on average is still around 16% and among the African-American population it is closer to 22%. It will take more than smoke and mirrors to fix this economy, and we have no more time to waste. Now they are talking a double dip recession? Seriously, this could be the death blow to our economy. All you folks who put down the unemployed might be getting in the bread line with those already in it. Depression is still a possibility and then those jealous of the rich will no longer have a need as everyone will be broke. No need to worry or pay taxes anymore either. I guess everyone will get their wish. Should have been careful what you wished for. Should have gotten leadership capable of fixing an economy. Should have stopped the exodus of manufacturing jobs leaving the country. Bunch of freaking idiot politicians.
Aug 5, 2011 8:52AM
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"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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