Weak Employment Data Contributes To Sell-Off On Wall Street

(RTTNews) - After plummeting early on in reaction to disappointing employment data, stocks lingered near their worst levels of the day throughout the trading session on Thursday. The major averages all posted steep losses ending the holiday-shortened week on a sour note.

For the week the, Dow fell by 1.9 percent, the Nasdaq slipped 2.3 percent and the S&P 500 dropped by 2.4 percent. The week's downward move was largely due to today's retreat.

It is worth noting that trading on the NYSE was extended by 15 minutes to accommodate any orders that may have been affected by a computer glitch seen earlier in the session.

The day's losses came on the heels of a report from the Labor Department showing that non-farm payroll employment fell by 467,000 jobs in June following a revised decrease of 322,000 jobs in May. Economists had expected a decrease of about 365,000 jobs compared to the loss of 345,000 jobs originally reported for the previous month.

With the bigger than expected decrease in employment, the unemployment rate edged up to 9.5 percent in June from 9.4 percent in May. The increase lifted the unemployment rate to its highest level since August of 1983, although it was below economist estimates of 9.6 percent.

Following the weak jobs data, traders largely shrugged off a report from the Commerce Department showing that orders for manufactured goods rose 1.2 percent in May following a downwardly revised 0.5 percent increase in April. Economists had expected orders to rise 0.9 percent compared to the 0.7 percent increase originally reported for the previous month.

On the corporate front, auto-parts supplier Lear Corporation (LEA | Quote | Chart | News | PowerRating) said that it has reached an agreement with lenders to restructure its debt and said it plans to file for Chapter 11 protection soon. In addition, the company said it had obtained $500 million in bankruptcy financing.

In other news, Walgreen Co. (WAG | Quote | Chart | News | PowerRating) said that its comparable store sales for the month of June increased 3.4 percent. Net sales for the month were $5.24 billion, up 9.0 percent from $4.80 billion for the same month in 2008.

Separately, Exelon (EXC | Quote | Chart | News | PowerRating) announced an increase in its bid to acquire all of the outstanding shares of NRG Energy (NRG | Quote | Chart | News | PowerRating), now offering a fixed exchange ratio of 0.545 of a share, a 12.4 percent increase over the initial exchange offer of 0.485.

The major indices saw further downside late in the session, finishing near their worst levels of the day. The Dow closed down by 223.32 points or 2.6 percent at 8,280.74, the Nasdaq fell by 49.20 points or 2.7 percent to 1,796.52, and the S&P 500 closed down 26.91 points or 2.9 percent at 896.42.

In overseas trading, stock markets across the Asia-Pacific region ended Thursday's session mostly lower. Japan's benchmark Nikkei 225 Index closed down by 0.6 percent, while Hong Kong's Hang Seng Index slipped by 1.1 percent.

The major European markets also closed firmly in the red, with the German DAX Index and French CAC 40 Index finishing down by 3.8 percent and 3.1 percent, respectively. The U.K.'s FTSE 100 Index also fell, posting a loss of 2.5 percent on the day.

In the bond markets, treasuries saw moderate strength amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note closed at 3.495 percent, a loss of 4.9 basis points on the day.

Some of the day's weakest performances came from commercial real estate stocks, as reflected by the 5.5 percent slide shown by the Morgan Stanley Real Estate Index. With the sharp decline, the index largely offset its late June rally.

Significant losses were also visible among resource stocks, with the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index retreating by 4.2 percent and 4.4 percent, respectively. The losses by resource stocks were largely precipitated by a plunge in commodities prices.

Retail stocks also retreated on the day, as reflected by the 3.8 percent loss posted by the S&P Retail Index. With the loss, the index gave back the majority of the gains it posted in late June.

Health insurance, healthcare provider, transportation, and defense stocks also dropped by considerable margins, evident of the day's broad-based retreat in the equity markets.

Along with a slew of long-term bond auctions on tap for next week, traders will also look to a series of economic reports on jobless claims, consumer sentiment and international trade.

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