Stocks Close Lower Following Disappointing Jobs Data - U.S. Commentary

(RTTNews) - Stocks moved mostly lower during trading on Wednesday, adding to the losses posted in the previous session. With the drop on the day, the tech-heavy Nasdaq ended the session at its lowest closing level in almost two months.

The major averages finished the session in the red but off their worst levels of the day. The Dow fell 99.65 points or 0.6 percent to 17,651.26, the Nasdaq slid 37.58 points or 0.8 percent to 4,725.64 and the S&P 500 dropped 12.25 points or 0.6 percent to 2,051.12.

The weakness on Wall Street was partly due to the release of some disappointing economic data, with a report from payroll processor ADP showing weaker than expected private sector job growth.

ADP said the private sector added 156,000 jobs in April following an increase of 194,000 jobs in March. Economists had expected the addition of 193,000 jobs for the month.

The report raised some concerns ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday.

The Labor Department report is expected to show an increase of about 200,000 jobs in April, while the unemployment index is expected to edge down to 4.9 percent.

A separate report from the Commerce Department showed a notably narrower U.S. trade deficit in the month of March.

The report said the trade deficit narrowed to $40.4 billion in March from $47.0 billion in February. The deficit had been expected to narrow to $41.4 billion.

The Labor Department also released a report showing a continued decrease in labor productivity and a jump in labor costs in the first quarter.

Meanwhile, the Institute for Supply Management released a report showing stronger than expected service sector growth in April.

The ISM said its non-manufacturing index climbed to 55.7 in April from 54.5 in March, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 54.7.

Sector News

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 5.3 percent. With the drop, the index continued to give back ground after reaching its highest levels in well over a year last Friday.

The weakness among gold stocks came amid a steep drop by the price of the precious metal, with gold for June delivery plunging $17.40 to $1,274.40 an ounce.

Significant weakness was also visible among biotechnology stocks, as reflected by the 3.6 percent loss posted by the NYSE Arca Biotechnology Index. The index fell to its lowest closing level in a month.

Oil service, airline, banking and computer hardware stocks also saw considerable weakness, while utilities and commercial real estate stocks showed strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Hong Kong's Hang Seng Index dropped by 0.7 percent, while Australia's All Ordinaries Index slumped by 1.5 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index tumbled by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries ended the day modestly higher after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 1.784 percent.

Looking Ahead

Compared to the slew of data released today, Thursday is a relatively quiet day on the U.S. economic front, although the Labor Department is due to release its weekly jobless claims report.