Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolios

US STOCKS-Wall St hurt by data, but financials limit losses

Published 08/05/2009, 04:41 PM
Updated 08/05/2009, 04:45 PM
BAC
-
RIG
-
BKR
-

* ISM and ADP data hurt investor sentiment

* P&G falls after disappointing outlook

* Financials limit losses, AIG surges 62.7 pct

* Dow off 0.4 pct, S&P off 0.3 pct; Nasdaq off 0.9 pct (Updates to close)

By Leah Schnurr

NEW YORK, Aug 5 (Reuters) - U.S. stocks slipped on Wednesday after weak data on the services sector and private payrolls cooled recent optimism the recession was retreating, but the market finished off its lows as investors ventured into riskier financial shares.

The market's decline came on the heels of a four-day rally that had driven the three major U.S. stock indexes to close on Tuesday at their highest levels in nine to 10 months.

The services sector contracted in July, data showed, while another report said private employers cut 371,000 jobs last month. The ADP private-sector jobs report increased investors' caution ahead of Friday's government data on July non-farm payrolls.

The data "reminds everyone this economic healing process is uneven and not every data point is going to go in a market- friendly direction," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

Disappointing corporate outlooks also weighed on the market and spurred investors to ease off from a rally that had pushed the Dow and the S&P 500 to nine-month highs. The Nasdaq had finished Tuesday's session at its highest close since early October.

Consumer products giant Procter & Gamble was the biggest drag on the Dow after it reported a slide in quarterly sales. P&G's stock tumbled 2.8 percent to $53.91.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

But some of the market's worst performers, including American International Group, surged as confidence in the recent rally spread to companies with the biggest question marks still hanging over them. Analysts also pointed to a short squeeze as investors who had bearish bets scrambled to buy back their short positions on fears that stocks would continue to rise.

AIG shot up 62.7 percent to $22 ahead of the company's second-quarter earnings on Friday, which are expected to stabilize for the first time in five years.

The Dow Jones industrial average slipped 39.22 points, or 0.42 percent, to 9,280.97. The Standard & Poor's 500 Index shed 2.93 points, or 0.29 percent, to 1,002.72. The Nasdaq Composite Index lost 18.26 points, or 0.91 percent, to 1,993.05.

Among other financial stocks, Bank of America jumped 6.5 percent to $16.66, while the S&P financial index jumped 3.3 percent.

In other earnings news, Dean Foods sank 9.2 percent to $19.38 after it gave a disappointing outlook.

Baker Hughes and Transocean also fell after they reported quarterly results that missed expectations. Baker Hughes' stock lost 7.8 percent to $38.68, while Transocean's shares slid 3.4 percent to $77.60.

On the data front, the Institute for Supply Management's services index dropped to 46.4 in July. Any reading below 50 indicates a contraction in the service sector, which accounts for about 80 percent of economic activity in the United States.

A report from ADP showed that private employers cut 371,000 jobs in July, suggesting the labor market remained weak. The U.S. Labor Department's non-farm payrolls report at the end of the week is expected to show 320,000 jobs were lost in July, according to economists polled by Reuters.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

In a splash of positive data after the regular trading session began, the Commerce Department said new orders received by U.S. factories unexpectedly rose in June, advancing for a third-straight month. (Reporting by Leah Schnurr; Editing by Jan Paschal)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.