RTTNews - Steep losses are continuing in the broader equity markets in mid-afternoon trading on Thursday, with stocks extending their disappointing performance on the heels of this morning's weaker than expected employment figures.
The major averages are all lingering near their worst levels of the day, although selling pressure has waned considerably from earlier in the session, as some traders look to get a head start on the long weekend.
The selling spree was largely precipitated by the Labor Department's monthly employment report, which showed that employment fell by much more than expected in the month of June, pushing the unemployment rate up to a new twenty-five year high.
In an interview with RTT News, Rich Yamarone, chief economist at Argus Research said the June government payrolls report suggests the economy may experience a W-shaped recovery. Yamarone, who initially predicted a V-shaped bounce back, warned, we may flip back again and experience a double dip.
Further, he stated that There's really very little reason to suspect that the economy is going to recover.simply because there's no stimulus directed toward the biggest part of the economy, and that's the small business.
Yamarone suggested, If we're going to get a recovery, it's going to have to come from another stimulus package
The employment data largely overshadowed the day's other economic report from the Commerce Department, which showed factory goods orders rose more than expected in May.
Since hitting their lows before noon, stocks have lingered near their lows for most of the session, continuing their sideways move in recent dealing. The Dow is currently down 175.11 at 8,328.95, the Nasdaq is down 42.37 at 1,803.35 and the S&P 500 is down 21.07 at 902.26.
All of the Dow components are sitting in negative territory, resulting in the triple-digit loss being shown by the blue chip index in mid-afternoon dealing.
Travelers (TRV) is posting one of day's steepest losses, with the insurance company seeing a 3.6 percent loss. The day's retreat has the stock poised for its lowest finish in one month's time.
Some construction related Dow components are also pulling back by notable margins, with Alcoa (AA) and Caterpillar (CAT) dropping by 3.7 percent and 3.5 percent, respectively. Notably, Caterpillar is looking to finish at its worst price in well over two months. Further, shares of Home Depot (HD) are also falling, diving by 3.4 percent on the session.
DuPont (DD), United Technologies (UTX) and Boeing (BA) are also declining, slipping by comparable margins of just about 3 percent each. Earlier in the day, United Technologies and Boeing set roughly two-month intraday lows.
Significant losses remain visible among resource stocks, with the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index retreating by 4 percent and 3.8 percent, respectively. The losses by resource stocks have largely been precipitated by a plunge in commodities prices.
One of the notable pullbacks in the oil service index has come with the decline in shares of Halliburton (HAL), which have fallen by 5.8 percent on the day. With the downward move, shares of Halliburton are poised to finish at their worst price in well over two months.
Weakness has also continued among retail stocks, as reflected by the 3.4 percent loss being shown by the S&P Retail Index. With the loss, the index is offsetting the majority of the gains it posted in late June.
Health insurance, commercial real estate, transportation and defense stocks are also declining by considerable margins, reflecting the day's broad based weakness.
In Focus: Economic Data, Corporate News
As mentioned above, a report from the Labor Department showed that non-farm payroll employment fell by 467,000 jobs in June following a revised decrease of 322,000 jobs in May. Economists had expected a decrease of about 365,000 jobs compared to the loss of 345,000 jobs originally reported for the previous month.
With the bigger than expected decrease in employment, the unemployment rate edged up to 9.5 percent in June from 9.4 percent in May. The increase lifted the unemployment rate to its highest level since August of 1983, although it was below economist estimates of 9.6 percent.
Separately, a report from the Commerce Department showed that orders for manufactured goods rose 1.2 percent in May following a downwardly revised 0.5 percent increase in April. Economists had expected orders to rise 0.9 percent compared to the 0.7 percent increase originally reported for the previous month.
At the same time, the Commerce Department said shipments of manufactured goods fell 0.9 percent in May, the tenth consecutive monthly decrease. This marks the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992.
On the corporate front, healthcare company Myriad Genetics (MYGN) said after the markets closed on Wednesday that it has successfully completed the spin-off of Myriad Pharmaceuticals (MYRX) and would now operate as two independent companies.
Meanwhile, auto-parts supplier Lear Corporation (LEA) said that it has reached an agreement with lenders to restructure its debt and said it plans to file for Chapter 11 protection soon. In addition, the company said it had obtained $500 million in bankruptcy financing.
In other news, Walgreen Co. (WAG) said that its comparable store sales for the month of June increased 3.4 percent. Net sales for the month were $5.24 billion, up 9.0 percent from $4.80 billion for the same month in 2008.
In overseas trading, stock markets across the Asia-Pacific region ended Thursday's session mostly lower. Japan's benchmark Nikkei 225 Index closed down by 0.6 percent, while Hong Kong's Hang Seng Index slipped by 1.1 percent.
The major European markets also closed firmly in the red, with the German DAX Index and French CAC 40 Index finishing down by 3.8 percent and 3.1 percent, respectively. The U.K.'s FTSE 100 Index also fell, posting a loss of 2.5 percent on the day.
In the bond markets, treasuries continue to see notable strength amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note is down to 3.5 percent, a loss of 4.4 basis points on the day.
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