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Stocks Seeing Continued Weakness On Disappointing Jobs Data - U.S. Commentary

5/2/2012 12:07 PM ET

Stocks remain mostly negative in mid-day trading on Wednesday, although selling pressure has waned from earlier in the session. A disappointing report on private sector employment continues to weigh on the markets.

The major averages have climbed well off their worst levels of the day but currently remain stuck in the red. The Dow is down 50.71 points or 0.4 percent at 13,228.61, the Nasdaq is down 4.35 points or 0.1 percent at 3,046.09 and the S&P 500 is down 7.22 points or 0.5 percent at 1,398.60.

The moderate weakness on Wall Street comes on the heels of the release of a report from payroll processor Automatic Data Processing (ADP) showing weaker than expected private sector job growth in the month of April.

ADP said that private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 201,000 jobs in March. Economists had expected an increase of about 183,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

"While April's increase was the twenty-seventh consecutive monthly advance, it nonetheless reflected a deceleration in the recent pace of hiring," Joel Prakken, Chairman of Macroeconomic Advisers, LLC, said in a statement.

The data has raised some concerns about Friday's more closely watched monthly employment report from the Labor Department, which includes government jobs.

A separate report from the Commerce Department showed that new orders for manufactured goods fell by 1.5 percent in March following a 1.1 percent increase in February. Orders had been expected to decrease by about 1.6 percent.

In corporate news, MasterCard (MA) is posting a modest loss even though the credit card giant reported better than expected first quarter results. The company's revelation of an increase in rebates and incentives may have raised concerns about future results.

Cable giant Comcast (CMCSA) is also trading lower despite reporting stronger than expected first quarter earnings growth.

Meanwhile, shares of Standard Microsystems (SMSC) have moved sharply higher on news that the company agreed to be acquired by Microchip Technology (MCHP) for about $829 million in cash.

Charming Shoppes (CHRS) is also posting a substantial gain after the retailer agreed to be acquired by Ascena Retail Group (ASNA) for about $890 million in cash.

Sector News

After trending higher in recent sessions, natural gas stocks are giving back some ground on the day. The NYSE Arca Natural Gas Index is down by 2.9 percent after ending the previous session at its best closing level in a month.

Chesapeake Energy (CHK) has helped to lead the sector lower after reporting weaker than expected first quarter results. Shares of Chesapeake Energy are down by 12.8 percent.

Gold stocks are also seeing considerable weakness, dragging the NYSE Arca Gold Bugs Index down by 1.9 percent. The weakness in the gold sector comes amid a decrease by the price of the precious metal, with gold for June delivery sliding $11 to $1,651.40 an ounce.

Significant weakness also remains visible among brokerage stocks, as reflected by the 1.9 percent loss being posted by the NYSE Arca Broker/Dealer Index. Steel, networking, and oil stocks are also posting notable losses in mid-day trading.

On the other hand, housing stocks have shown a strong move to the upside, driving the Philadelphia Housing Sector Index up by 1.8 percent. Some trucking and health insurance stocks are also posting standout gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index ended the day up by 0.3 percent, while Hong Kong's Hang Seng Index advanced by 1 percent.

Meanwhile, the major European markets turned mixed over the course of the trading day. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index fell by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries are seeing strength on the day following the disappointing jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 1.922 percent.

by RTT Staff Writer

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