Late Sell-Off, Europe Worries Drive Stocks Lower

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 |  Includes: DIA, QQQ, SPY
by: Midnight Trader
  • Dow Jones Industrial Average down 47.15 (-0.36%) to 12,896.67
  • S&P 500 down 6.44 (-0.47%) to 1,367.58
  • Nasdaq Composite Index up 0.04 (+0.00%) to 2,976.12

GLOBAL SENTIMENT

  • Hang Seng Index up 0.50%
  • Shanghai China Composite Index down 1.17%
  • FTSE 100 Index up 0.14%

Stocks finished with small declines, snapping a three-day rally after Europe's chief central banker offered a cautious view of regional prospects despite a cut in benchmark interest rates to an all-time low. Traders also were cautious ahead of new payroll data, due out tomorrow. Jobs data today surprised to the upside -- with the ADP private payroll report rising to 176,000 new jobs -- easily topping expectations. Mixed same-store sales activity by several larger retailers helped lift consumer stocks somewhat, although overall market activity was dampened by news the U.S. service sector slowed to a 30-month low in June. Commodities also ended lower.

The European Central Bank this morning cut interest rates to a record low 0.75% and also lowered its rate on overnight deposits to zero, while the Chinese central bank cut its main rate by 31 basis points to 6%. Mario Draghi, the European Central Bank's president, said some "downside risks to the euro-area economic outlook have materialized. The main downside risks relate to weaker-than-expected economic activity." Draghi did not hint at further easing, likely disappointing some traders.

Officials in China also cut a key lending rate, while the Bank of England today boosted its program of quantitative easing, moving to increase asset purchases by another 50 billion pounds to 375 billion pounds overall.

Private-sector employment rose by 176,000 workers from May to June on a seasonally adjusted basis, according to the ADP National Employment Report released today. The ADP National Employment Report is derived from actual payroll data and measures the change in total nonfarm private employment each month. The estimated gain from April to May also was revised slightly higher, adding 3,000 jobs to the initial estimate of 133,000. First-time applications for jobless benefits fell 14,000 to 374,000 in the week ended June 30, Labor Department figures showed today.

The Institute for Supply Management said its non-manufacturing index dropped to 52.1, less than projected, from 53.7 in May, according to a report from the Tempe, Arizona-based group today. The median forecast of 70 economists surveyed by Bloomberg News called for 53. Readings above 50 signal expansion.

Retailers jumped as June same-store sales largely matched analysts' estimates, with luxury chains such as Saks Inc. (NYSE:SKS) and discounters like TJX Cos. (NYSE:TJX) topping expectations. But Target (NYSE:TGT) disappointed, reporting 2.1% same-store growth last month, compared to the 2.8% growth projected by analysts. Walgreen Company's (NYSEMKT:WGA) June sales declined 6.8% from 2011 levels to $5.63 billion, with same-store sales sliding 10.0%.

Commodities ended mostly lower. August crude fell $0.60 to settle at $87.13 a barrel, while August natural gas rose $0.04 to $2.94. August gold fell $11.90 to $1609.90 an ounce, September silver fell $0.61 to $27.68 an ounce, while September copper fell $0.05 to $3.49.

UPSIDE MOVERS

(+) ROST, June sales rise 12% to $866 million. Same-store sales climb 7%.

(+) RMTR, Rejects unsolicited $2.68-a-share buyout offer from Cypress Semiconductor (CY).

(+) ASUR, Acquires PeopleCube for $9.8 million; revises Q3, Q4 EBITDA; revenues higher.

DOWNSIDE MOVERS

(-) HUSA, Abandons Cachirre #1 well in Columbia after failing to find oil.

(-) AMBO, Reports $0.14 a share Q1 net loss; Wall Street was expecting $0.14 a share profit.

(-) SNY, (-3.1%) Reportedly cutting up to 2,000 jobs.