Market Update: Stocks Taking Another Beating After Opening Higher -- Sound Familiar?
September's jobs report, released this morning an hour before the open, had the market awash in green at the open. The report was mixed to friendly, with unemployment falling back to the 30-year low of 3.9% not seen since April, while wage growth pressures were lower-than-expected, showing 0.2% growth vs. expectations of 0.3%.
TheStreet.com
wrote a
separate story covering this morning's report, looking at the pace of jobs growth and interpreting what the data mean for the economy.
But earnings remain the market's biggest concern, and the initial optimism faded quickly on the
Nasdaq Composite Index. The Nasdaq was lately accelerating into the red, off 77 to 3395. The
Dow Jones Industrial Average held out a little longer, but lost its footing about an hour after the bell. The Dow was off 105 to 10,620.
Earnings warnings continue to flutter in, and last night a few more from the tech sector alighted on Wall Street during after-hours trading.
The evening's warning companies included Web-site designer
Razorfish
(RAZF)
, data storage and imaging systems manufacturer
Imation
(IMN)
, Internet-based software firm
Marimba
(MRBA)
and e-commerce software provider
Concord Communications
(CCRD)
.
Concord Communications had lost half of its market cap in early trading. The stock lost 53.5% to $9.94 and was one of the most active stocks on the Nasdaq.
Other big tech losers for the day included data storage and optical networking firm
Veeco
(VECO) - Get Report
, which warned of lower-than-expected third-quarter sales and earnings last night and announced the resignation of its president and COO this morning. The company's stock was getting slaughtered, off 31.6% to $70.63.
Tech bellwethers like
Intel
(INTC) - Get Report
,
Oracle
(ORCL) - Get Report
,
Hewlett-Packard
(HWP)
and
Sun Microsystems
(SUNW) - Get Report
were sledding back towards the flatline after swinging higher in early action.
The Dow was struggling most under the weight of
Home Depot
(HD) - Get Report
, which was slashing 17 points from the blue-chip index. Financial services firm
American Express
(AXP) - Get Report
was also doing the Dow some damage, slashing 11 points off the top.
Traders said the market probably won't resume any uphill stride until the earnings warnings flow dries up, oil prices show a steady drop and companies begin to report solid third-quarter earnings and positive outlooks for coming quarters. (Earnings season starts in earnest next week).
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Sector Watch
Telecom stocks remained under pressure today. The sector has been in the doghouse with investors since early September on concerns over slowing handset sales. A downgrade on
AT&T
(T) - Get Report
from
Salomon Smith Barney
, which also lowered the company's 12- to 18-month price target, didn't help. AT&T was down 3.9% to $27.75,
Lucent
(LU)
was falling 0.2% to $32,
SBC Communications
(SBC)
was 1.4% lower to $52.88 and
Nokia
(NOK) - Get Report
was off 3.2% to $38.25.
The
Nasdaq Telecommunications Index
was off 3.2%.
The energy stocks were getting a lift from a rebound in oil prices today. Oil prices were clawing their way back up after falling sharply Thursday on
news that the government had awarded contracts for all 30 million barrels of stockpiled crude oil offered to the refineries. The
American Stock Exchange Oil & Gas Index
was up 1.3%, while the
American Stock Exchange Natural Gas Index
was 2% higher.
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Bonds/Economy
Bond prices are under pressure as investors conclude that the September
employment report
(
definition |
chart |
) makes the
Fed less likely to ease up on interest rates in the near future.
The September jobs report measured a decline in the unemployment rate to 3.9% -- matching the 30-year low it hit in April -- from 4.1% in August. A low unemployment rate is a key indicator of a healthy economy, one that does not require assistance from the Fed in the form of easier monetary policy.
Also indicating that the economy is strong, the employment report counted 252,000 new nonfarm jobs in September. Netting out the loss of 27,000 temporary Census jobs and the return of 75,000 strikers, the underlying increase was 204,000, in line with the recent trend. A shift in monetary policy is unlikely to occur unless there is a pronounced slowdown in the pace of job-creation.
At the
Chicago Board of Trade
, where
fed funds futures are listed, traders were busy downgrading the odds of an interest-rate cut during the first quarter to 18% from 34% yesterday. A week ago, the April contract was discounting even odds that the Fed would cut the fed funds rate to 6.25% from 6.5% by that month.
The benchmark 10-year
Treasury note lately was down 1/32 at 99 2/32, lifting its yield to 5.868%.
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