Stocks Decline Again as Wall Street Frets Over Friday's Jobs Report
NEW YORK (TheStreet) -- It was another down day for stocks after a disappointing payrolls preview triggered fears about the economy ahead of Friday's official report.
Adding to the market's sour mood, the Federal Reserve said several regions of the U.S. were hurt by lower oil prices in February.
The S&P 500 was down 0.43% and the Dow Jones Industrial Average tumbled 0.58%, falling further from record highs set on Monday, while the Nasdaq declined 0.26%, down from its 15-year high 5,000 level.
But recent declines are likely to be short-lived and haven't undermined the market's upward trajectory, said Geoffrey Pazzanese, portfolio manager at Federated Investors."The market has been on a straight line up now for 14 months with some corrections as you go," he said in a call. "There's times when we're going to have corrections but we're still on an upward long-run bull market trend... Usually they present a buying opportunity for investors." ADP said just 212,000 jobs were added to private payrolls in February, representing a nine-month low and sparking fears February's official jobs report would signal a slackening labor market after months of robust strength. The reading was less than an expected 220,000 increase. "ADP's report certainly tempers expectations for Friday's employment report," said Sterne Agee chief economist Lindsey Piegza. "Weakness resulting from port disruptions and cold winter weather may, however, act as a welcome scapegoat for an overly soft February report putting increased pressure on the March release to signal the 'real' underlying trend in U.S. employment." The Bureau of Labor Statistics will release the U.S. jobs report for February on Friday. Expectations are for 235,000 jobs to have been added to nonfarm payrolls compared to 257,000 a month earlier. The unemployment rate is forecast to tick down 100 basis points to 5.6%. The U.S. economy continued to expand across all 12 districts, though half saw slower growth, the Fed said in the latest "Beige Book," a collection of anecdotal economic information. The effect of lower oil prices continued to hurt regions reliant on the commodity including Dallas, Minneapolis and Kansas City. Drilling activity declined in several states, while a number of energy producers said they expect to cut capital spending this year. Alcoa (AA - Get Report) was downgraded to "neutral" from "buy" at Bank of America as analysts said worsening aluminum fundamentals had put pressure on the company. Full-year earnings estimates were also decreased to $1.15 a share from $1.30. Shares fell 3.9%. U.S. crude oil inventories increased 10.3 million barrels over the week ended Feb. 27, up from 8.4 million barrels in the prior week, according to the Energy Information Administration. The total was more than double an expected increase of 4.2 million barrel. West Texas Intermediate crude recovered from earlier losses, climbing 2.4% to $51.71 a barrel. Exxon Mobil (XOM - Get Report) was the latest and largest oil company to announce a cut to capital spending in the face of plunging commodity prices. The oiler reduced capital spending by 12% to $34 billion over 2015, following in the footsteps of rivals Chevron (CVX) and Royal Dutch Shell (RDS.A). Major oilers have been forced to cut future spending plans as sliding oil prices reduced profitability. Lumber Liquidators (LL) turned sharply lower, down 12.5% on Wednesday afternoon, after Sen. Bill Nelson of Florida called for a federal probe into the company over the safety of its products. Shares have been under pressure after a 60 Minutes report found dangerously high chemical levels in some of its Chinese-made goods, linking the company to pricey health and safety violations. Abercrombie & Fitch (ANF) slumped more than 15% after quarterly sales tumbled nearly 14% and comparable-store sales fell 10%. Fellow teen retailer American Eagle Outfitters (AEO) jumped 7.7% after fourth-quarter earnings of 36 cents a share beat estimates by 2 cents and revenue climbed 3%. Firearms manufacturer Smith & Wesson (SWHC) jumped nearly 10% after beating analysts' estimates on its top- and bottom-lines. The company also raised its full-year earnings forecast as high as 89 cents a share from a previous 78 cents.
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