(ADP) Stock Market News for September 2, 2011 – Market News

Investors remained cautious ahead of crucial employment data and chose not to bet big bucks, while mixed economic reports and a plunge in banking stocks pushed the markets into the red for the first time in four days.

The Dow Jones Industrial Average (DJIA) inched down by a percent to settle at 11,493.57. The Standard & Poor 500 (S&P 500) dropped 1.2% to finish the day at 1,204.42. The Nasdaq Composite Index slipped 1.3% and ended the day at 2,546.04. The fear-gauge CBOE Volatility Index (VIX) traded roughly at 32. On the New York Stock Exchange, the American Stock Exchange and Nasdaq, consolidated volumes were 7.49 billion shares, down from last year’s daily average of 8.47 billion. On the NYSE, for every four stocks that gained, eleven stocks moved lower. However, with gains on all of the four days of this week apart from yesterday, the Dow, S&P 500 and Nasdaq are up 1.9%, 2.3% and 2.7%, for the week.

Of the 30 Dow components, only Cisco Systems, Inc. (NASDAQ:CSCO) managed to inch up by a percent, while the rest closed in the red. Alcoa, Inc. (NYSE:AA), Caterpillar Inc. (NYSE:CAT), Walt Disney Co. (NYSE:DIS), 3M Co. (NYSE:MMM), Microsoft Corporation (NASDAQ:MSFT) and United Technologies Corp. (NYSE:UTX) were among the top losers and they lost 2.4%, 2.7%, 2.0%, 1.7%, 1.5% and 1.6%, respectively.

Moments after the opening bell, the Dow had had moved up 103 points after manufacturing data showed that the manufacturing sector had expanded for the 25th consecutive month in August. Additionally, the overall economy also expanded for the 27th consecutive month. The ISM Manufacturing Index had slipped 0.3% from July to 50.6% in August, but was still higher than the consensus expectation of a reading of 48.4%.

A mixed bag of economic reports guided the markets throughout the day amid investors’ apprehensions over the government’s jobs report. Data from the Commerce Department revealed construction spending moved down unexpectedly in July, as private spending dipped and public outlays plunged to their lowest level since December 2006. According to the report: “Construction spending during July 2011 was estimated at a seasonally adjusted annual rate of $789.5 billion, 1.3 percent (±1.9%)* below the revised June estimate of $799.8 billion. The July figure is 0.1 percent (±1.9%)* above the July 2010 estimate of $789.0 billion”. Commenting on private and public construction the report said: “Spending on private construction was at a seasonally adjusted annual rate of $514.5 billion, 0.9 percent (±1.1%)* below the revised June estimate of $519.0 billion,” and, “In July, the estimated seasonally adjusted annual rate of public construction spending was $275.0 billion, 2.1 percent (±2.7%)* below the revised June estimate of $280.8 billion”.

In a separate report about unemployment claims, the Commerce Department struck a positive chord as it reported a fall in initial claims. According to the U.S. Department of Labor, the advance figure for seasonally adjusted initial claims dropped 12,000 to 409,000 for the week ending August 27, from the previous week’s revised figure of 421,000.

This job report comes a day after payroll-processor Automatic Data Processing (ADP) reported that the economy added an additional 91,000 jobs in the private sector driven primarily by the service sector and small businesses. Economists were hoping the ADP to report a 100,000 hike in job additions. Though the figures were lesser-than-expected, market watchers believe this is a positive report given the difficulties the economy has been struggling with recently. However, the initial claims report will be followed by crucial non-farm payrolls data scheduled for release on Friday. Investors thus took a cautious stance as hopes and apprehensions over the state of the economy kept them away from big bets.

Separately, reports suggested that the US productivity declined in the sector quarter, falling at an annualized rate of 0.7%. Additionally, Unit-labor costs increased at an annualized rate of 3.3% in the last quarter and moved higher from an initial projection of 2.2%.

Negating fears about the economy, a report from Thomson Reuters showed a 4.4% improvement in retail sales. However, this was lower than the Street’s estimates of a gain of 4.6%. Among retail stocks, Costco Wholesale Corporation (NASDAQ:COST) and Dollar Tree, Inc. (NASDAQ:DLTR) gained 1.2% and 0.5%, respectively, but stocks of Wal-Mart Stores Inc. (NYSE:WMT), Target Corp. (NYSE:TGT), Dollar General Corporation (NYSE:DG), Family Dollar Stores Inc. (NYSE:FDO) and PriceSmart Inc. (NASDAQ:PSMT) declined by 1.0%, 1.2%, 1.7%, 1.3% and 1.7%, respectively.

The banking sector also witnessed a decline, which was primarily due to the regulator’s action against a former subsidiary of The Goldman Sachs Group, Inc. (NYSE:GS). Concerns were raised about the bank’s wrongful foreclosures after agreements with Federal Reserve and New York State’s banking regulator. Goldman Sachs was ordered by the Federal Reserve to recheck foreclosure practices carried out by former subsidiary Litton Loan Servicing, citing a “pattern of misconduct and negligence” existing in the unit.Goldman Sachs’ shares dropped 3.5% and other banking stocks like Morgan Stanley, Bank of America Corporation, JPMorgan Chase & Co. and Citigroup, Inc. lost 3.3%, 3.2%, 3.4% and 3.4%, respectively.

ALCOA INC (AA): Free Stock Analysis Report

CATERPILLAR INC (CAT): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

CISCO SYSTEMS (CSCO): Free Stock Analysis Report

DOLLAR GENERAL (DG): Free Stock Analysis Report

DISNEY WALT (DIS): Free Stock Analysis Report

DOLLAR TREE INC (DLTR): Free Stock Analysis Report

FAMILY DOLLAR (FDO): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

PRICESMART INC (PSMT): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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