Stocks Declined on Heels of Poor Job Data

Published on Friday, 06 July 2012 18:57 Written by Christopher Lynn

New York, July 6^th (TradersHuddle.com) – Stocks ended the week on a negative tone, as the U.S. economy continues to struggle to generate significant jobs growth. The disappointing jobs data in the world’s largest economy weighed on risk assets, with the Dow and the S&P 500 logging weekly losses and the NASDAQ eking a gain for the fifth consecutive week.

The Dow Jones Industrial Average fell 124.20 points, or 0.96%. The S&P 500 index lost 12.90 points or 0.94%, while the NASDAQ tumbled 38.79 points, or 1.30%.

For the week, the Dow declined 0.84%, while the S&P 500 fell 0.55% and the NASDAQ climbed 0.08%.

The market started under pressure as futures weakened significantly after the disappointing employment data. The U.S. economy added 80,000 jobs in June, well below the 100,000 jobs that economists widely expected. The unemployment rate stayed at 8.2%, as private employers added 84,000 jobs, below the expected 105,000 jobs.

Overseas had a mixed action ahead of the data, Chinese stocks jumped 1% on response to the rate cut from the Chinese central bank, while European markets were trading lower, as Spanish yields inched back to the 7% level.

The weak data in the U.S. coupled with the ECB rate cut in the prior session, spooked investors out of risk assets and the euro, with the European currency slumping below $1.23, hitting a 2-year low.

All of the S&P 500 sectors closed in negative territory, with technology, industrials, energy, and materials underperforming the broad market index. Technology stocks were the worst performers in the S&P 500 Index after enterprise data firm Informatica (NASDAQ: INFA) issued downside second quarter guidance. Shares of Informatica plunged more than 28% on the session after the lower guidance and several downgrades.

 Peer Teradata (NYSE: TDC) slumped 10%, posting the worst decline in the broad market index, while Citrix Systems (NASDAQ: CTXS) dropped 7.6% and F5 Networks (NASDAQ: FFIV) lost 6.9% after peer Acme Packet (NASDAQ: APKT) issued downside guidance for the second quarter, as well.

Following on the negative pre-announcements, Seagate Technology (NASDAQ: STX) lost 0.50% to $24.50 after pre-announcing that it will miss revenue expectations for its fiscal fourth quarter.

Also, Apple (NASDAQ: AAPL) slid 0.67% to $605.88, closing above $600 per share for the second straight day. Apple jumped in the week amid reports the company is planning to unveil an iPad mini later in the year. A Bloomberg report discussed the possibility of Amazon (NASDAQ: AMZN) entering the competitive smartphone market, with a device running Google’s Android operating system. Shares of Amazon lost 0.90%.

Continuing in the Internet area, Facebook (NASDAQ: FB) climbed 0.83% to $31.73, on news the company agreed to form an advertising partnership with Yahoo (NASDAQ: YHOO) as part of a final settlement of a patent infringement lawsuit. Yahoo lost 0.44% amid reports the struggling Internet Company was considering Hulu CEO Jason Kilar for its permanent CEO position.

Other economic sensitive stocks were clearly under pressure. Caterpillar (NYSE: CAT) slumped 2.5%, posting the second biggest decline in the Dow Jones Industrial Average, while Alcoa (NYSE: AA) followed closely with a drop of 2.2%. Alcoa will unofficially kick off the earnings season next Monday after the closing bell.

In the financial sector, Bank of America (NYSE: BAC) lost 2.05% to $7.66, closing below its 20day moving average at $7.77, but ending above its 50day moving average at $7.62. Rival JPMorgan (NYSE: JPM) fell 1.4% to $33.90 on news the company has closed its European money market funds to new investors.