Stocks Fell as Focus Turn to Jobs

Published on Thursday, 05 July 2012 18:21 Written by Christopher Lynn

New York, July 5^th (TradersHuddle.com) – Stocks closed lower, in a thinly traded session, after a round of interest rate cuts from the ECB and China and better than expected data in the U.S. labor market failed to inspire a bid as participants returned from the 4^th of July Holiday and wait for the key June employment report due out tomorrow.

The Dow Jones Industrial Average lost 47.15 points, or 0.36%. The S&P 500 index lost 6.44 points, or 0.47%, while the NASDAQ added less than 1 point, or 0.01%.

The market started in negative ground, after futures were unable to hold on initial gains despite interest rate cuts from China’s Central Bank and the ECB, and better than expected data on the labor market. Futures gained after China cut interest rates for the second time in a month and the Bank of England increased its asset purchase program. The ECB followed with a rate cut of 25 basis points, which was largely in-line with expectations.

On economic data, the June ADP private employment report showed that private employers added 176,000 jobs, which was much better than the figure of 105,000 that was widely expected. Also, weekly jobless claims had a positive tone, with initial claims totaling 374,000, which was better than expected.

Also on the economic front, the ISM Services index expanded less than expected in June to 52.1 from 53.7 in May, its lowest level since January 2012.

The session had the influence from largely negative June retail sales from national chain retailers. 14 of the 20 companies reporting missed expectations. Nordstrom (NYSE: JWN), TJX Companies (NYSE:TJX), and Saks (NYSE: SKS) were among the retailers beating expectations. TJX Companies jumped 3.74% to $44.09 after posting a new record high of $44.63. The company also raised its second quarter earnings guidance. Nordstrom gained nearly 2%, while Saks jumped 2.5%.

Among the retailers missing expectations were Costco Wholesale (NASDAQ: COST), Target (NYSE: TGT), and Macy’s (NYSE: M). Costco slid 0.44%, while Target lost more than 1% after the company also reaffirmed its second quarter earnings guidance. Macy’s jumped 2.7% after it reaffirmed its guidance and Deutsche Bank gave a buy rating to the stock.

But still the performance of the stocks in the consumer discretionary was positive, helping the sector to close on positive ground. Netflix (NASDAQ: NFLX) surged 13.4% after its CEO Reed Hastings said that the company's streaming service surpassed for the first time 1 billion hours in June. Netflix posted the biggest percentage gain in the S&P 500 Index.

The other S&P 500 sectors closed in negative territory, with financials, energy, and industrials posting the biggest declines. Despite the positive tone from the labor market data, participants viewed an environment, in which central banks need to be cutting rates as a negative for the sector. JPMorgan (NYSE: JPM) tumbled 4%, posting the biggest percentage decline in the Dow Jones Industrial Average, while rival Bank of America (NYSE: BAC) slumped nearly 3% to $7.82.

Meanwhile in the technology front, Apple (NASDAQ: AAPL) helped limit the losses. The maker of iPhones and iPads jumped 1.76% to $609.94, settling above the $600 per share level for the first time since April. The stock gained after reports suggested the tech giant would unveil an iPad mini with a 7-inch screen later this year. An analyst from Topeka Capital said on CNBC that a cheaper iPad mini could drive the stock to $1001 per share.