Dow Jones Industrial Average at 9,876 this morning, up six points.
NEW YORK (AP) — The stock market was ending a painful second
quarter quietly, holding onto small gains after another
disappointing report on the jobs market.
Moves were modest Wednesday afternoon as financial stocks rose in
response to a change in the banking overhaul bill that removed $19
billion in proposed taxes on banks. A report on manufacturing in
the Midwest barely topped expectations but also gave stocks some
support.
The Dow Jones industrial average rose 31 points, a day after
falling 268. The other major indexes were also slightly higher.
Payroll company ADP said private employers added just 13,000 jobs
in June. That’s well short of the forecast of 60,000 from
economists polled by Thomson Reuters.
The weaker-than-expected jobs report is the latest in a long string
of disappointing economic data that has contributed to the market’s
turbulent second-quarter performance. Heading into the final day of
June, the Dow was down 9.1 percent for the three-month period.
Broader indexes were down 11 percent.
Sam Stovall, chief investment strategist of U.S. equity research at
Standard & Poor’s, said investors are nervous.
“Basically it’s wait and see,” Stovall said. Investors are cautious
leading into Friday’s jobs report from the Labor Department and
upcoming earnings season, which kicks off in a couple of weeks.
That has led them to sell shares, particularly in the last few
days, he said.
The ADP report is often seen as a precursor to the Labor Department
big monthly employment report. ADP’s data only includes jobs
created by private companies so it can vary widely from the Labor
Department data, which also includes government jobs.
Friday’s government report is expected to show employers cut a
total of 110,000 jobs in June. However, economists predict the net
loss of jobs is tied primarily to the government laying off
temporary workers that were hired to work on the 2010 census.
But after the weak report from ADP, investors are concerned about
the number of jobs private employers have added this month. May’s
employment report showed private employers were hiring few
workers.
Companies have been slow to add new jobs coming out of the
recession. Consumer confidence has fallen and spending has not
picked up as investors had hoped because there are still so many
people out of work.
“We didn’t have the exit velocity coming out of the recession to
right the ship,” a managing partner at investment bank Westwood
Capital. “The question now is what’s the chance of a double-dip
(recession) versus very slow growth.”
The Chicago Purchasing Managers Index, which measures midwestern
manufacturing activity, fell to 59.1 in June, from 59.7 last month.
That drop was just above the 59 forecast by economists. The report
comes a day before the Institute for Supply Management releases its
report on June manufacturing activity nationwide.
In early afternoon trading, the Dow fell 30.76, or 0.3 percent, to
9,901.06. The Standard & Poor’s 500 index rose 5.75, or 0.6
percent, to 1,046.99, while the Nasdaq composite index rose 16.40,
or 0.8 percent, to 2,151.58.
About three stocks rose for every one that fell on the New York
Stock Exchange, where volume came to 395.1 million shares.
Financial shares were helping the market after Democrats dropped a
proposal in the financial regulation overhaul bill that would have
levied $19 billion in taxes on large banks and hedge funds. That
money will instead come from money generated by the bank bailout
program launched during the credit crisis in late 2008.
Citigroup Inc. rose 10 cents, or 2.7 percent, to $3.83. Wells Fargo
& Co. added 26 cents to $26.19, while KeyCorp rose 20 cents, or 2.6
percent, to $8.01.
Shares of European financial companies also got a boost after the
European Central bank said European banks did not borrow as much
through a three-month refinancing program as expected. That
reassures investors that banks in Europe might not be hurting as
bad from rising sovereign debt in countries like Greece, Spain and
Portugal.
However, some of the gains in major European indexes were erased
after the disappointing U.S. jobs report. Britain’s FTSE 100 rose
0.1 percent, Germany’s DAX index gained 0.1 percent, and France’s
CAC-40 rose 0.3 percent.
Stocks have been pummeled for much of the second quarter by fears
that mounting deficits in Europe would upend a recovery on that
continent and eventually in other countries including the U.S.
The euro, used by 16 European Union members, has become a proxy for
confidence in the continent’s economic recovery. It has dropped
about 9 percent during the second quarter, but was up only slightly
Wednesday at $1.2286.
As investors pulled out of stocks and fled the euro throughout the
quarter, U.S. Treasurys and gold were big beneficiaries. The
perceived safety of the two helped push bond and gold prices
higher.
The yield on the 10-year Treasury note, which moves opposite its
price, went below 3 percent for the first time in more than a year
on Tuesday, falling to 2.95 percent. It budged off that low
Wednesday, rising to 2.99 percent.
Gold rose $2.60 to $1,245.00 an ounce, and is up nearly 12 percent
for the quarter.
The Russell 2000 index of smaller companies rose 7.28, or 1.2
percent, to 623.24.
