Stocks Fall After Jobs Data Trails Forecast
A sign points job seekers in the right direction of a job fair in Denver. Photographer: Matthew Staver/Bloomberg
June 1 (Bloomberg) -- David Resler, chief economist at Nomura Securities International Inc., talks about data from ADP Employer Services indicating U.S. companies added fewer workers than forecast in May. Resler, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses the housing market and the outlook for the economy. (Source: Bloomberg)
June 1 (Bloomberg) -- Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole SA in Hong Kong, talks about the outlook for global currencies. Kotecha speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Stocks slid, snapping a four-day advance for the Standard & Poor’s 500 Index, and Treasuries rallied as data on jobs and manufacturing fueled concern that economic growth is slowing. The dollar and commodities fell.
The Standard & Poor’s 500 Index slipped 0.9 percent at 10:11 a.m. in New York and the Stoxx Europe 600 Index 0.8 percent. Ten-year Treasury note yields sank below 3 percent for the first time in 2011 and the Dollar Index lost 0.3 percent. The Swiss franc snapped a two-day drop against the euro. Greek 10-year yields increased 16 basis points to 16.22 percent, recovering almost half of yesterday’s drop. The S&P GSCI Index of commodities tumbled 0.8 percent.
U.S. equities halted their longest streak of gains in a month after companies added 38,000 workers to payrolls in May, according to figures from ADP Employer Services, less than one- quarter of the median growth forecast by economists. Stocks extended losses after the Institute for Supply Management’s factory index fell more than projected.
“We’re in a moderate phase,” said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion. “There are, of course, reasons for a slowdown. The rise in energy prices, the disruptions from Japan’s earthquake and the slower pace in emerging markets. The market will be consolidating until we get more evidence that this weakness is temporary.”
Broad Retreat
Financial firms, raw-material producers and industrial companies led declines in all 10 industry groups in the S&P 500. JPMorgan Chase & Co., Alcoa Inc., American Express Co. and Bank of America Corp. fell more than 1.8 percent for the biggest losses in the Dow Jones Industrial Average.
The ISM’s factory index fell to 53.5 in May from 60.4 the prior month. Economists projected the gauge would drop to 57.1, according to the median forecast in a Bloomberg News survey. Estimates of the 83 economists polled ranged from 53 to 60.
The S&P 500 has fallen more than 2 percent from an almost three-year high at the end of April, and Treasuries have rallied, as economic data began to trail economists’ estimates and investors prepared for the Federal Reserve to complete its $600 billion bond-purchase program by the end of this month. Citigroup Inc.’s U.S. Economic Surprise Index, which tracks the rate at which data is beating or missing estimates, turned negative in May and has since fallen to the lowest level since January 2009.
Jobs Concern
Labor Department data on June 3 will probably show a projected 180,000 gain in payrolls following a 244,000 April increase, according to a Bloomberg survey.
The ADP data today “will attract some interest, with some using them as a proxy to second guess Friday’s non-farm payrolls data,” said Yusuf Heusen, senior sales trader at IG Index in London.
The Stoxx 600 retreated for the second day this week. Banca Monte dei Paschi SpA sank 6.6 percent, as the Italian lender’s controlling shareholder sold 450 million shares on behalf of Fondazione Monte dei Paschi di Siena, a term sheet for the deal showed.
Nokia Oyj (NOK1V) tumbled 5.1 percent after Goldman Sachs Group Inc. downgraded the stock to “neutral” from “buy.” Outokumpu Oyj (OUT1V) gained 4.6 percent after the Finnish maker of stainless steel said it will sell a 4.3 percent stake in Talvivaara Mining Co. to Solidium Oy.
Greek, German Spreads
The difference in yield between Greek 10-year bonds and benchmark German bunds increased 18 basis points. Greece’s next aid package may include incentives for bondholders to keep lending without triggering a downgrade that would roil Europe’s banking system, two people with knowledge of the talks said. So- called negative incentives are also under consideration, such as cutting off old Greek bonds from eligibility for use as collateral with the European Central Bank, the people said.
The franc strengthened against all 16 of its major counterparts, gaining 1.2 percent versus the euro, after retail sales rose in April at the fastest rate for two years, boosting speculation the Swiss National Bank will increase borrowing costs. Britain’s pound weakened against all but one of its peers after a manufacturing index fell to a 20-month low and U.K. mortgage approvals dropped to the least in four months.
The MSCI Emerging Markets Index advanced 0.2 percent, gaining for a fifth day, the longest streak in almost two months. Taiwan’s Taiex Index climbed 0.8 percent. The Bombay Stock Exchange Sensitive Index rose 0.6 percent after Morgan Stanley predicted it will rebound 19 percent this year. Thailand’s SET Index slid 0.8 percent before the central bank raised its benchmark one-day bond repurchase rate for the fourth time this year.
Crude oil slid 1 percent to $101.70 a barrel in New York. Sugar climbed 0.2 percent on harvest delays in Brazil, the world’s largest producer. Gold was little changed.
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