U.S. stocks fell for a second day, carrying the S&P 500 to its lowest levels in a month as investors continue to weigh the possibility of the Federal Reserve reducing or ending its bond-buying program and largely downbeat economic data. All 10 sectors in the S&P 500 lost ground, led by materials stocks despite small gains for most commodities. Shares of financial and consumer discretionary companies also fell hard in the selloff.
The Fed Effect
By the time the Fed's latest Beige Book summary of U.S. economic conditions came out at 2 p.m., market direction had already been long established. The central bank said the economy expanded at a "modest to moderate" pace in 11 of the 12 Federal Reserve districts, with broad-based gains ranging from business services to construction and manufacturing.
"Most districts noted slight to moderate gains in consumer spending and a moderate increase in vehicle sales," according to the report, which was compiled by the Minneapolis Fed. Hiring increased at a measured pace in several districts with some contacts telling the Fed they were having difficulty finding qualified workers.
U.S. Jobs
Earlier, the session got off to a soggy start after Automatic Data Processing said private employers added 135,000 new workers during May, up slightly from the prior month but trailing expectations for around 157,000 new hires. Revised nonfarm business sector productivity rose an annualized 0.5% pace during Q1, the Bureau of Labor Statistics reported Wednesday. Output rose 2.1% and hours worked grew 1.6% during the quarter with overall productivity climbing 0.9% from the first three months of 2012.
A measure of U.S. labor costs unexpectedly fell 4.3% in Q1, the fastest pace in over four years although analysts said the reading appeared to be distorted by a shift in employee compensation during the prior period to avoid a tax hike. The Labor Department initially had reported a 0.5% gain.
Commodities were mostly higher as traders looked for alternatives to stocks. Crude oil for July delivery settled 43 cents higher at $93.74 per barrel while July natural gas was little changed at $4.00 per 1 mln BTU. August gold rose $1.30 to finish at $1,398.40 per ounce while July silver added 6 cents to settle at $22.47 per ounce. July copper was little changed at $3.37 per pound.
Here's Where The Markets Stood At Day's End
- Dow Jones Industrial Average down 216.95 (-1.43%) to 14,960.59
- S&P 500 down 22.48 (-1.38%) to 1,608.90
- Nasdaq Composite Index down 43.78 (-1.27%) to 3,401.48
- Hang Seng Index down 0.97%.
- Shanghai China Composite Index down 0.06%.
- FTSE 100 down 2.02%.
- (+) HNR, Reports adjusted Q1 net income of $0.11 per share, reversing a $0.03 per share net loss during the same quarter last year and easily topping analyst expectations for an $0.11 per share net loss. Total revenue declined 2.3% year over year to $213 mln.
- (+) KNDI, The Ministry of Industry and Information Technology of the People's Republic of China clears the JL7001BEV - the first pure electric sedan jointly developed by KNDI and Geely Automobile Holdings Ltd. -- for sales in that country.
- (+) ADNC, Partnering with China Mobile to establish and implement smartphone specifications and test for voice quality, noise suppression and speech recognition. Also Wednesday, Benchmark initiated coverage with a Hold rating and a price target of $15 a share.
- (-) YGE, Said anti-dumping duties imposed by the European Commission targeting solar products originating or shipped from China would lead to the stagnation of the European market. YGE products initially will be subject to a 11.8% duty, rising to 37.3% starting Aug. 6 through the end of the year unless there is a negotiated resolution.
- (-) EXFO, Cuts outlook for fiscal Q3 financial results, now expecting a net loss of between $0.01 to $0.02 per share on around $59 mln in revenue. The Street is looking for a $0.06 per share profit on $65.7 mln in revenue.
- (-) GA, Vogel Holding Group Ltd has begun an underwritten public offering of 15.1 mln of the company's American Depositary Shares.
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