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Unemployment spike
deflates market gains
NEW YORK >> Investors unnerved by a larger-than-expected jump in unemployment sent stocks lower yesterday, taking profits from Wall Street's two days of rallies. But news of surprisingly strong growth in the nation's service sector helped offset the losses.
While economic data have been turning more positive, disappointments like the jobless rate prompt investors to question whether stock prices, earnings and the economy will recover in the second half of 2003. So far, however, the selloffs haven't been steep or long lasting, which analysts say points to investors' growing optimism.
The jobless report, "more than anything ... is a reason for the market to come down a little bit. I don't think it is going to cause a tremendous sell-off. It is going to be one of those figures that causes investors to sell on for a few hours or a few days before moving forward again," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati.
The Dow Jones industrial average ended a shortened trading session down 72.63, or 0.8 percent, at 9,070.21. The loss nearly halved the 157.40-point gain from the previous two sessions.
The broader market also retreated. The Nasdaq composite index fell 15.27, or 0.9 percent, to 1,663.46, following a two-day win of 55.93. The Standard & Poor's 500 index declined 8.05, or 0.8 percent, to 985.70, having advanced 19.25 in the past two days.
Declining issues outnumbered advancers nearly 8 to 5 on the New York Stock Exchange. Consolidated volume was light at 954.16 million shares. Consolidated volume on Wednesday, when the market was open a full day, totaled 1.89 billion.
The Russell 2000 index, the barometer of smaller company stocks, fell 2.54, or 0.6 percent, to 456.35. The NYSE composite index dropped 32.09 to 5,558.46. The American Stock Exchange composite index slipped 0.85 to 976.16.
Still, the gauges ended the week higher because of the buying that took place Tuesday and Wednesday. The Dow ended the week up 0.9 percent, while the Nasdaq climbed 2.4 percent and the S&P rose 1 percent.
Trading was light yesterday ahead of the Independence Day weekend and ended three hours early. The market is closed today.
"People are in their vacation mode. What (trades) you are seeing is profit taking before the long weekend," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.
Panera Bread fell 45 cents to $42.25 after BB&T Capital Markets downgraded the restaurant company to "hold" from "buy."
AT&T declined 46 cents to $19.42 after S&P cut the company's credit rating by one notch to triple-B, saying the telecommunications service provider has a high long-term risk profile.
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