Jobs Report Sends Stocks Down
By Kevin Burke
05/03/2002 11:57
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Updated from 10:57 a.m. EDT
Stocks remained sharply lower at midday Friday as the latest employment report showed that the jobless rate in April reached its highest level in almost eight years .
Recently, the Dow Jones Industrial Average was falling 106 points, or 1%, to 9985. The Nasdaq was off 31 points, or 1.9%, to 1614, and the S&P 500 was lower by 12 points, or 1.1%, to 1072.
The Labor Department issued its monthly employment report before the bell, revealing that nonfarm payrolls rose by 43,000 last month, while the unemployment rose to 6% from 5.7% in March. Economists were expecting the unemployment rate to rise to 5.8%, with 60,000 workers added to payrolls. The report is considered the single best measure of the overall health of the economy and will set the tone for other indicators that will be released this month.
Another economic report, the Institute for Supply Management's monthly nonmanufacturing survey , indicated that the service sector of the economy grew again in April but at a slower pace than in the prior two months. The report follows the ISM's factory sector data earlier this week, which showed the same trend. According to the latest report, the ISM's nonmanufacturing index fell to 55.3 last month from 57.3 in March.
Little corporate news was filtering through Friday morning, but after the close Thursday, Emerson Electric EMR said second-quarter earnings fell because of weak demand at its electronics and telecommunications businesses, but still met analysts' forecasts. Separately, regional utility company Allegheny Energy AYE posted weaker first-quarter earnings, but matched expectations, as unseasonably warm weather conditions curbed heating demand. Emerson was gaining 5%, and Allegheny was down 6%.
Vodafone VOD was losing 9% to $14.45 after the mobile phone service provider cut its expectations at its German and Italian businesses. Meanwhile, shares of medical devices maker Guidant GDT were losing 3% to $38.16 even though the company received regulatory approval for its new implantable defibrillator.
Some of the other big percentage losers on the New York Stock Exchange included EMC EMC , down 4.3%; Texas Instruments TXN , off 4.7%; and Aurora Foods AOR , down 23%. Winners included Tesoro Petroleum TSO , up 12%, and Administaff ASF , higher by 7%.
In other corporate news, Germany's Schering AG said it will purchase Immunex's IMNX Leukine cancer treatment in its latest effort to expand its reach in the world's biggest drug market. Immunex was basically flat on the news.
After the close, Hewlett-Packard HWP and Compaq CPQ expect to finally close their merger. First Tennessee National FTN was trading up 3.8% to $40 after Standard & Poor's announced that it will replace Compaq in the S&P 500 Index.
U.S. Treasury issues were higher following the employment report. The 10-year note was up 4/32 to 98 15/32, yielding 5.07%, and the 30-year bond was the strongest issue.
Overseas markets were mixed, with London's FTSE 100 up 0.6% to 5203 and Germany's Xetra DAX down 1.1% to 4910. Japan's Nikkei 225 finished down a fraction at 11,551, while the Hang Seng added 0.2% to 11,797. |
