Investors were trading hesitantly in the wake of two economic reports released this morning: the
employment numbers, which revealed a drop in the unemployment rate but a bigger-than-expected decline in nonfarm payrolls, and the
purchasing managers' index, which showed continued weakness in the manufacturing sector.
At midmorning, the major indices were moving off their lowest levels of the day. The
Dow Jones Industrial Average was down 21.6 points, or 0.2%, to 10,890.2, with weakness concentrated in cyclical -- or economically sensitive -- stocks. Shares of
were all trading lower.
Technology stocks were in better shape: The
Nasdaq Composite was lately up about 13 points, or 0.6%, to 2123.4. Strength on the index was seen in semiconductor and computer stocks.
was up 5% to $28.38 and
was ahead 0.5% to $112.35. The broader-market
S&P 500 was recently off 3 points, or 0.2%, to 1252.81.
"We need more time to absorb the numbers," a trader at a large Wall Street firm said. "Traders have gotten grief for doing a lot in a short amount of time. Right now, there is no reason to step in front of the gun."
Today's economic numbers have not altered expectations for an interest-rate cut when the
Federal Reserve meets on June 26-27. The
fed funds futures are currently putting a 90% chance on a 25 basis-point cut at the coming meeting.
For the first time in eight months, the monthly unemployment rate fell to 4.4% from 4.5% in April. By contrast, nonfarm payrolls decreased by 19,000 vs. economists' expectations for a 17,000 decline. Job losses were concentrated in the manufacturing sector, which shed 124,000 jobs in May, compared to 113,000 in April. Since last July, 675,000 manufacturing jobs have been lost, with more than two-thirds of the decline occurring since December.
The purchasing managers index for May fell to 42.1. The survey of approximately 300 purchasing executives nationwide measures the conditions of the factory sector. A reading of 50 or above signals expansion, while a measure below 50 signals contraction. The index has not been above 50 since July 2000. The latest reading is lower than the 43.5 that was expected by economists and last month's 43.2.
Meanwhile, earnings concerns still weigh heavily on the market after
warned Tuesday it would miss its second-quarter targets, kicking off the
second-quarter confession season. Some market professionals say Sun's news sparked a major change in market psychology. Sun was lately off 0.2% to $16.44.
Filing into the confession pew, chipmaker
lowered its revenue guidance for the second quarter, citing lower than expected international sales.
But in a conference call last night, chip-equipment maker
maintained its prior financial guidance for the second quarter. There had been some buzz on Wall Street that the company would warn.
were lately up 2.4% to $24.57, while
was ahead 2.6% to $49.11.
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