Stocks Churn Lower Ahead Of April Jobs Report, Markets Retreat After Weak Service-Sector Report

4:10 PM, May 3, 2012 -- U.S. stocks finished lower for a second session after a new report said service industries expanded less than expected last month, stalling an early rally that followed initial jobless claims last week falling by the largest amount in nearly one year. All 10 industry sectors in the S&P 500 finished in the red, with energy and material stocks posting the steepest declines as commodity prices also tumbled.

The Institute for Supply Management this morning reported a 2.5-point decline in its non-manufacturing business purchasing managers index, falling to a 53.5% reading in April. Reading above 50% indicate expansion but the fall was much sharper than the 0.5-point decline in the Marketwatch analyst consensus.

Stocks turned lower after the report, giving back moderate gains that followed the Labor Department reporting that the number of Americans filing first-time claims for unemployment insurance fell to 365,000 during the week ended April 28. The 27,000-person decline was the largest weekly drop since early May 2011 and carried the weekly total analyst expectations for 380,000 new claims.

The government tomorrow reports monthly job hiring and the overall unemployment rate for April with consensus opinion expecting no change from the 8.2% rate reported in March. Employers are seen adding 167,000 jobs, according to the Briefing.com consensus, up from the 121,000 workers hired in March.

Non-farm productivity and costs fell 0.5% in Q1, matching forecasts, according to preliminary figures also released today by the Labor Department. Unit labor costs rose 2.0%, down from a 2.8% rise in the prior quarter. Initial response to the report was positive, with experts saying the drop in productivity -- the largest decline since Q2 of 2011 -- points to the need for companies to bring on more new hires. Productivity rose 0.9% in Q4.

April chain-store sales offered a mixed picture, with shares of Target (TGT), Walgreen Co (WAG) and the Gap (GPS) all retreating today after each reported weaker-than-expected same-store sales. Costco Wholesale Corp (COST) also missed Wall Street estimates for the second month in a row. But April comps for The TJX Companies Inc (TJX), whose brands include T.J. Maxx, Marshalls and HomeGoods, rose 6%, beating a 4.1% estimated increase and prompting the company to raise its Q1 EPS guidance. Several other clothing retailers, including Limited Brands Inc (LTD) and Zumiez Inc (ZUMZ), also posted better-than-expected sales last month.

Overall, the 19 chains tracked by Thomson Reuters reported a 0.8% increase overall during April -- missing the 1.5% gain analysts had forecast.

In other corporate news, General Motors (GM) shares were down today despite Q1 profits for the automaker topping estimates. Excluding one-time items, GM earned $0.93 a share on $37.8 billion in Q1 sales, up from 4.4% from the $36.2 billion in year-ago sales. Analysts had been expecting an $0.85 a share profit on $37.9 billion in revenues, according to FactSet.

Green Mountain Coffee Roasters (GMCR) tumbled nearly 48%, establishing a new 52-week low, after the company reduced its current-year financial targets because of difficulty predicting demand for its Keurig single-serve coffee brewers and packs. GMCR is now guiding for FY12 sales in a range of $3.8 billion to $4.0 billion and per-share earnings of $2.40 to $2.50. The Street is at earnings of $2.67 per share and $4.27 billion in revenues. Fiscal Q2 revenues also missed forecasts by nearly 10%.

Kensey Nash (KNSY) leapt 32% after the medical-device manufacturer agreed to be acquired by Dutch life-sciences company Royal DSM for about $337 million in cash.

Crude oil for June delivery settled $2.68 lower at $102.54 a barrel. June gold fell $20.10 to finish at $1634.30 an ounce while July silver fell 58 cents to finish at $30.05 an ounce. July copper finished 5 cents lower at $3.73 a pound. June natural gas rallied 8.7 cents to settle at $2.34 per 1 million BTU following a bullish inventory report this morning.

Here's where the markets stand at an end-of-day:

Dow Jones Industrial Average down 61.98 (-0.47%) to 13,206.59

S&P 500 down 10.74 (-0.77%) to 1,391.57

NASDAQ Composite Index down 35.55 (-1.16%) to 3,024.30

GLOBAL SENTIMENT

Hang Seng down 0.3%

Shanghai Composite up 0.1%

FTSE-100 up 0.06%

UPSIDE MOVERS

(+) AVNW, Surprises with Q3 EPS of $0.05 vs. $0.01 net loss forecast by analysts.

(+) WWE, Q1 earnings body-slam Wall Street expectations.

(+) WFM, Q2 earnings beat by $0.05 a share; revises Q3 EPS range 6.5% above prior guidance.

(+) ALL, Q1 profit of $1.53 a share tops consensus view by $0.43, revenues in-line.

DOWNSIDE MOVERS

(-) VCLK, Q1 revenues 3% below Street view; guides Q2 EPS, revenues under consensus.

(-) WTW, 36% bulge in Q1 ad spending fails to boost sales; EPS slims 26% from year ago.

(-) MITK, Fiscal Q2 earnings swing to $0.09 a share net loss, revenues slide 58%.

(-) PRU, Adjusted Q1 earnings of $1.56 a share lags consensus by $0.15.