A cautious stance by investors ahead of the Government's payroll
report on top of a mixed bag of economic reports dragged the
benchmarks down for the second-consecutive day. Additionally,
retail bellwethers such as Target, Macy's, and Costco reported
dismal sales for April, further dampening investor sentiment.
Corporate earnings were also disappointing, adding to the
The Dow Jones Industrial Average (DJI) was down 0.5% to
13,206.59 and further retreaded from its late-2007 high, a level
which had been achieved last Tuesday. The Standard & Poor 500
(S&P 500) slid 0.8% to finish yesterday's trading session at
1,391.57. The tech-laden Nasdaq Composite Index suffered the most
as it plunged 1.2% to close at 3,024.30. Consolidated volumes on
the New York Stock Exchange, the Nasdaq and American Stock Exchange
were 6.9 billion shares, marginally higher than the daily average
of roughly 6.76 billion. Declining stocks easily outpaced the
advancers on the NYSE, as for seven stocks that traded down, only
three stocks moved higher.
What weighed on the investors' sentiment is the apprehension
over the nature of nonfarm payroll data, scheduled for release on
Friday. Investors had received a jolt when, on Wednesday, Automatic
Data Processing, Inc.'s (NASDAQ:
) National Employment Report revealed that U.S. nonfarm private
business sector added only 119,000 jobs in April, far lower than
expectations of an addition of 177,000 jobs. Following this report,
expectations took a downturn and it is now believed that nonfarm
payroll data will show additions of 125,000 to 150,000 jobs as
against 170,000 job additions estimated by Reuters.
These apprehensions were further intensified following a mixed
bag of economic data. The Institute for Supply Management released
data suggesting that the massive U.S. services sector had slowed
more than expected for the month of April. According to the report,
the NMI dropped 2.5 percentage points from March to 53.5% in April.
A reading above 50% indicates expansion for the non-manufacturing
components of the economy, but the drop suggested a slower pace of
expansion, even lower than expectations. Consensus estimates had
projected a reading of 55.1%.
The initial claims report was the only major bright spot
yesterday. The U.S. Department of Labor reported that the advance
figure for seasonally adjusted initial claims had dropped 27,000
from the previous week's revised figure of 392,000 to 365,000 for
the week ending April 28. The sharp decline in initial claims was
higher than consensus estimates of a drop to 376, 000.
Concerns were not restricted to the economic data alone as big
retailers added to the gloom following a less-than-expected
same-store sales report. Consequently bellwethers like Costco
Wholesale Corporation (NASDAQ:
), Target Corp. (NYSE:
), Gap Inc. (NYSE:
), Saks Incorporated (NYSE:
) dropped 2.8%, 2.5%, 1.6% and 0.9%, respectively. Macy's, Inc.
) managed gains of 0.7%, but along with Costco, Macy's April
performance was the worst since 2009.
Corporate earnings failed to provide any relief with companies
including General Motors Company (NYSE:
), Cablevision Systems Corporation (NYSE:
) and Health Net, Inc. (NYSE:
) releasing disappointing quarterly figures. Shares of these
companies plunged 2.4%, 7.9% and 24.9%, respectively. Meanwhile,
Green Mountain Coffee Roasters Inc. (NASDAQ:
) suffered the second-largest decline in the Nasdaq 100, dropping
47.8% after missing second-quarter 2012 sales estimates. This was
the company's second miss in three quarters and it downwardly
revised its fiscal 2012 outlook.
AUTOMATIC DATA (ADP): Free Stock Analysis
COSTCO WHOLE CP (COST): Free Stock Analysis
CABLEVISION SYS (CVC): Free Stock Analysis
GENERAL MOTORS (GM): Free Stock Analysis Report
GREEN MTN COFFE (GMCR): Free Stock Analysis
GAP INC (GPS): Free Stock Analysis Report
HEALTH NET INC (HNT): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
SAKS INC (SKS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
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