RTTNews - Stocks are continuing to post steep losses in early afternoon trading on Thursday, as an uninspiring employment report deflated recent economic optimism. The major averages continue to linger deep in negative territory, looking to close the shortened trading week on a down note.
The early sell-off was largely prompted 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.
Meanwhile, a better-than-expected factory goods orders report from the Commerce Department did little to mitigate the day's pessimism.
The major indices have continued to move roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 178.05 at 8,326.01, the Nasdaq is down 45.96 at 1,799.76 and the S&P 500 is down 21.44 at 901.89.
While significant weakness is visible in most of the major sectors, retail stocks are posting notable losses, as reflected by the 3.7 percent retreat 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.
The retail sector is being dragged down by shares of Children's Place Retail Stores (PLCE), which have slid by 7.5 percent on the day. The day's drop has pulled the stock down to its worst intraday price in well over two months.
Resource stocks also continue to retreat by notable margins, with oil service, gold and natural gas stocks pulling back by considerable margins. The Philadelphia Oil Service Index is down by 4.1 percent on the day after hitting a two-month intraday low.
The losses by resource stocks have largely been precipitated by a plunge in commodities prices. Oil is down $2.45 at $66.86 a barrel, while gold has plummeted by $12.10 to $929.20 an ounce.
Commercial real estate, healthcare provider, health insurance, transportation and electronic storage stocks are also retreating by considerable margins, reflecting the day's weakness in a variety of segments.
Stocks In The News
Sepracor (SEPR) is falling in early afternoon trading after the firm said its Phase II clinical trial to evaluate the efficacy and safety of SEP-225289 for treatment of major depressive disorder did not meet a primary end-goal. The stock is down by 18.1 percent, pulling back well off the nine-month closing high set in the previous session.
Shares of TiVo (TIVO) are also sliding following an announcement that the U.S. Court of Appeals for the Federal Circuit granted the request of EchoStar (SATS) and its related companies to stay the contempt order imposed by the U.S. District Court pending the outcome of EchoStar's appeal. TiVo stock has dropped by 15 percent, sliding to a one-month intraday low earlier in the session.
Meanwhile, Elan Corp. (ELN) is on the rise after entering into an agreement with Johnson & Johnson (JNJ) whereby J&J will acquire all of the assets and rights of Elan related to its Alzheimer's Immunotherapy Program. Shares of Elan are up by 13.9 percent after reaching their best intraday level since mid-January earlier in the day.
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 strong gains amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note is down to 3.487 percent, a loss of 5.7 basis points on the day.
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