Wednesday, August 3, 2011


U.S. stocks faltered in choppy trading as investors continued to digest the recent days' fiscal debates, hit by weak economic data and continuing uncertainty in Washington and Europe.
The Dow Jones Industrial Average fell 107 points, or 0.9%, to 11759 in morning trading, while the Standard & Poor's 500-stock index shed 14 points, or 1.1%, to 1240. The Nasdaq Composite fell 35 points, or 1.3%, to 2634.
The declines came after the U.S. services sector softened and factory orders fell. Private-sector hiring in July came in a touch better than expected, limiting some of the declines after a day of heavy selling across global stock markets.
"The jobs data was certainly a number we needed to have, and it prevented us from falling even further, but the number wasn't enough in and of itself," said Peter Coleman, managing director and director of research at JMP Securities.
If investors are able to squeeze out a gain, it would end an eight-day stock market slide that included the biggest one-day selloff in two months. Investors are bracing for a look at weekly jobless claims on Thursday before Friday's important monthly nonfarm payrolls report.
"The market is hanging on by its fingertips, and continued poor employment is only going to stoke the belief in a double-dip recession, or whatever you want to call it," Coleman said. "The employment numbers are going to be critical if we want to gain any ground."
Energy stocks led the selloff as crude oil prices tumbled to just above $92 a barrel. Chevron fell 1.1% while Exxon Mobil shed 0.9%. In signs of further weakness, Caterpillar lost 1.6% while Boeing fell 1.3%.
In overseas markets, European stocks fell sharply in the wake of the U.S.'s Tuesday losses, with the Stoxx Europe 600 falling 1.7% to hit an 11-month low in intraday trading. Asian bourses were also hit hard; Japan's Nikkei Stock Average fell 2.1%.
Gold futures rose to above $1,670 an ounce, after settling Tuesday at a record on the New York Mercantile Exchange, as continued anxiety kept money flowing into safe-haven assets. Treasurys found a bid, sending the yield on the benchmark 10-year note to 2.5834%, a nine-month low.
The U.S. dollar lost ground against both the euro and the yen. Both the euro and the dollar fell against the Swiss franc after the Swiss National Bank cut interest rates close to zero, provided fresh liquidity to currency markets and warned it could take more action.
In economic news, Automatic Data Processing reported 114,000 new private-sector jobs were added in July, slightly better than consensus expectations for a gain of 105,000 jobs. However, the previous month's jobs number was revised down to 145,000 new jobs, from an original estimate of 157,000. Challenger Gray & Christmas said announced job cuts in July increased 60% from the previous month, hitting a 16-month high.
Separately, the U.S. nonmanufacturing sector expanded at a very sluggish pace in July although production picked up, according to data released Wednesday by the Institute for Supply Management. The ISM's nonmanufacturing purchasing managers' index slipped to 52.7 in July from 53.3 in June, below expectations of a 53.5 reading.
Meanwhile, orders for U.S. factory goods fell for the second time in three months during June, falling 0.8% from the prior month, slightly better than an expected 1.0% drop.
In corporate news, Hertz Global Holdings and CBS both reported earnings and revenue that exceeded Wall Street expectations late Tuesday. Hertz fell 2.5%, while CBS slipped 0.3%. Time Warner fell 4.2% after it also topped forecasts, while increasing its stock buyback program.
MasterCard gained 6.5% after second-quarter earnings climbed 33%, benefiting from double-digit increases in volume and processed transactions.
IntercontinentalExchange fell 2.2% after second-quarter earnings jumped 19% as the market operator saw its top line get a boost from strong trading volume in its Brent crude and gasoil futures and options contracts.
Dunkin' Brands dropped 4.3% after second-quarter profit fell 1%, weighed down by higher expenses, though the company registered strong international sales growth. The parent company of Dunkin' Donuts and Baskin-Robbins, which went public last month, reported a profit of $17.2 million, down from $17.3 million a year earlier.
KKR & Co. fell 4.5% after the private-equity firm reported a 32% increase in second-quarter profits, but fell far short of earnings and revenue expectations.
Elsewhere, shares of Garmin slipped 0.1% after missing earnings estimates, while AMAG Pharmaceuticals rallied 9.5% after receiving a buyout bid from MSMB Capital Management.