Stock Market News for June 3, 2011 - Market News

A volatile day of trading came to a close with benchmarks ending in the red and as it stands there are now clear signs of markets heading into a fifth consecutive week of losses. Investors refrained from betting big ahead of the crucial jobs report from the Labor Department, which will likely add to concerns about a slowing economy. 

Markets had initially garnered some gains, but these were soon washed out as investors remained worried about the jobs report. The Dow Jones Industrial Average (DJIA) had dropped 100 points in the mid-session but finally recovered to end at 12,248.55, dropping 41.59 points or 0.3%. The Dow is most likely en route to its fifth straight week of losses, the first time since July 23, 2004. The Standard & Poor 500 (S&P 500) declined 0.1% to close at 1,312.94 and the Nasdaq Composite Index was down to 2,773.31, shedding 0.2%. On the New York Stock Exchange, AMEX and Nasdaq, consolidated volumes were 7.2 billion shares, below last year's daily average of 8.47 billion shares. For every seven shares that climbed up on the NYSE, eight stocks declined.

For several days now, investors have not been greeted with any positive economic data that could have significantly lifted their sentiments. A day after Automatic Data Processing’s (ADP) Employment Services reported slowing growth in U.S. private-sector payrolls for May, the Labor Department reported initial claims higher than estimates. The report failed to lift investor sentiment and the markets continued to be dampened by economic weakness.

According to the U.S. Department of Labor: “In the week ending May 28, the advance figure for seasonally adjusted initial claims was 422,000, a decrease of 6,000 from the previous week's revised figure of 428,000. The 4-week moving average was 425,500, a decrease of 14,000 from the previous week's revised average of 439,500.” The Consensus forecast for seasonally adjusted initial claims was 416,000.

This report comes a day ahead of the important non-farm payroll data to be released by the government. The Consensus for the current period is an addition of 188,000 jobs. Total non-farm payrolls account for approximately 80% of the workers who produce the entire gross domestic product of the United States. The non-farm payroll statistic assists government policy makers and economists to determine the current state of the economy and predict future levels of economic activity. Investors are keep their fingers crossed and expect a positive report this time that could lift the markets from the prevailing weakness.

In a similar development, the U.S. Census Bureau’s report on factory orders indicated weakness in the economy. According to the Commerce Department: “New orders for manufactured goods in April, down two of the last three months, decreased $5.5 billion or 1.2 percent to $440.4 billion. This followed a 3.8 percent March increase. Excluding transportation, new orders decreased 0.2 percent”. The department also stated: “New orders for manufactured durable goods in April, down two of the last three months, decreased $7.1 billion or 3.6 percent to $190.3 billion, unchanged from the previously published decrease. This followed a 4.6 percent March increase. Transportation equipment, also down two of the last three months, had the largest decrease, $4.8 billion or 9.3 percent to $46.9 billion”.

On a sectoral basis, higher gas prices combined with weak economy adversely affected the retailers in May. Consumer staples led the declines in the S&P 500 and shares of Wal-Mart Stores Inc. (NYSE:WMT) led the declines in the Dow, dropping 1.4%. Other decliners included, J. C. Penney Company, Inc. (NYSE:JCP), Target Corp. (NYSE:TGT), Limited Brands, Inc. (NYSE:LTD), Pepsico, Inc. (NYSE:PEP), The Coca-Cola Company (NYSE:KO) and Macy's, Inc. (NYSE:M), and they shed 2.7%, 1.3%, 2.2%, 1.1%, 1.1% and 0.9%, respectively.

After reports came in that New York City’s top prosecutor was subpoenaing The Goldman Sachs Group, Inc. (NYSE:GS), the financial major’s shares slid 1.3% as did the other bellwethers in the financial sector. Among stocks that declined were Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM) and American International Group, Inc. (NYSE:AIG) and they shed 0.5%, 0.4% and 0.1%, respectively.

AMER INTL GRP (AIG): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

PENNEY (JC) INC (JCP): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

COCA COLA CO (KO): Free Stock Analysis Report

LIMITED BRANDS (LTD): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

PEPSICO INC (PEP): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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