Stocks sink after weak data on jobs
AP posted: 4:52 PM 05/04/11NEW YORK -Serious doubts about the health of the job market and the pace of the economic recovery have investors on edge.
Stocks fell sharply midday Wednesday after private payroll processor ADP said that 179,000 new private sector jobs were added in April, far less than economists were expecting. That raised worries about what the government's monthly jobs report for April will reveal. The report is due out Friday.
The Institute for Supply Management also said its service sector index rose at the slowest pace in 8 months in April, as many companies express concerns about higher food and gas prices. The U.S. service industry employs about 90 percent of the U.S. work force, so signs of a slowdown have implications for the overall economy.
"I think we're getting indications that (the U.S. economy) is not that healthy," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.
The Dow Jones industrial average fell 127 points, or 1 percent, to 12,680. The average of 30 large companies is still up nearly 10 percent for the year, following better-than-expected earnings results.
The Standard & Poor's 500 index fell 14, or 1 percent, to 1,342. It remains up nearly 7 percent for the year.
The Nasdaq composite index fell 29, or 1 percent, to 2,812. The technology heavy index is still up about 6 percent this year.
Positive earnings results from companies like Apple, Intel and Caterpillar have sent all three indexes to 2011 highs over the past two weeks. But some of that excitement is now fading, said Sam Stovall, chief investment strategist at Standard & Poor's.
"In a sense, the market is already in digestion mode," Stovall said. "The earnings have already come out, they were so much better than expected; much of that has already been factored into share prices."
Earnings results were mixed on Wednesday. Kellogg Co. said its net income fell 12 percent as the world's biggest cereal maker dealt with higher costs. The results missed analysts' expectations. Kellogg's stock fell 1 percent.
Time Warner, the owner of Warner Bros. and HBO, said its first-quarter earnings fell 10 percent because of a lack of hit movies in the period. Advertising revenue rebounded, but its shares still fell 3 percent. .
AOL's net income dropped sharply as the Internet company reported lower advertising and subscription revenue. Its stock fell 1 percent.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.22 percent from 3.26 percent late Tuesday.
Stocks fell sharply midday Wednesday after private payroll processor ADP said that 179,000 new private sector jobs were added in April, far less than economists were expecting. That raised worries about what the government's monthly jobs report for April will reveal. The report is due out Friday.
The Institute for Supply Management also said its service sector index rose at the slowest pace in 8 months in April, as many companies express concerns about higher food and gas prices. The U.S. service industry employs about 90 percent of the U.S. work force, so signs of a slowdown have implications for the overall economy.
"I think we're getting indications that (the U.S. economy) is not that healthy," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.
The Dow Jones industrial average fell 127 points, or 1 percent, to 12,680. The average of 30 large companies is still up nearly 10 percent for the year, following better-than-expected earnings results.
The Standard & Poor's 500 index fell 14, or 1 percent, to 1,342. It remains up nearly 7 percent for the year.
The Nasdaq composite index fell 29, or 1 percent, to 2,812. The technology heavy index is still up about 6 percent this year.
Positive earnings results from companies like Apple, Intel and Caterpillar have sent all three indexes to 2011 highs over the past two weeks. But some of that excitement is now fading, said Sam Stovall, chief investment strategist at Standard & Poor's.
"In a sense, the market is already in digestion mode," Stovall said. "The earnings have already come out, they were so much better than expected; much of that has already been factored into share prices."
Earnings results were mixed on Wednesday. Kellogg Co. said its net income fell 12 percent as the world's biggest cereal maker dealt with higher costs. The results missed analysts' expectations. Kellogg's stock fell 1 percent.
Time Warner, the owner of Warner Bros. and HBO, said its first-quarter earnings fell 10 percent because of a lack of hit movies in the period. Advertising revenue rebounded, but its shares still fell 3 percent. .
AOL's net income dropped sharply as the Internet company reported lower advertising and subscription revenue. Its stock fell 1 percent.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.22 percent from 3.26 percent late Tuesday.
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