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Jobless woes send stocks down { August 1 2003 } Original Source Link: (May no longer be active)
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Jobless woes send stocks down
Associated Press
Published August 1, 2003 STOC02
NEW YORK -- Wall Street pulled back Friday after a lackluster employment report renewed investors' worries that the economic recovery would not be as speedy as hoped.
``Even though unemployment went down, the number of jobs available did too and that's really key,'' said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C. ``Investors have been looking for when the economy can create jobs and it hasn't yet.''
By midafternoon, the Dow Jones industrial average was down 58.55, or 0.6 percent, at 9,175.25, more than wiping out a 33-point gain in the previous session that marked its fifth straight winning month.
The broader market also declined. The Nasdaq composite index fell 14.07, or 0.8 percent, to 1,720.95, having notched a six-month winning streak. The Standard & Poor's 500 index lost 8.30, or 0.8 percent, to 982.01, after it posted a fifth month of gains Thursday.
The Labor Department reported the nation's unemployment rate declined to 6.2 percent in July from 6.4 percent in the previous month. The figure was slightly better than analysts' estimates, but much of the drop came from 470,000 disenchanted people who abandoned job searches.
Meanwhile, the Institute for Supply Management said its manufacturing index rose to 51.8 in July from 49.8 in June. A reading above 50 indicates expanding manufacturing activity; analysts had been forecasting a July reading of 52.0.
Trading has been choppy in recent weeks as investors, having sent stocks surging since mid-March, seek proof of a strong economic recovery. Many investors believe employment in particular must show clear improvement for the rebound to continue.
``For the overall market to move forward, we need clear signs the economy is getting better,'' Kayes said. ``Even though second-quarter earnings were by and large decent, top-line growth wasn't really there. A lot of (positive) earnings surprises came from cost-cutting and a lower tax rate, issues that might not be a real long-term sustainable driver.''
IBM fell 59 cents to $80.66 after a federal judge ruled that the technology company discriminated against older workers when it switched its pension plan.
Johnson & Johnson dropped $1.38 to $50.41 after Merrill Lynch cut the company's stock rating to ``neutral'' from ``buy.''
ChevronTexaco declined 88 cents to $71.23 after the oil company reported quarterly operating profits that handily beat Wall Street's expectations.
Gainers included Disney, which gained 58 cents to $22.50, after the media and entertainment company posted quarterly profits that beat analysts' estimates by 2 cents per share; it also said operating results should continue into the fourth quarter and in 2004.
Altria Group rose 36 cents to $40.37 after a California jury cleared its Philip Morris unit of negligence and misrepresentation in a tobacco lawsuit.
Declining issues outnumbered advancers 5 to 2 on the New York Stock Exchange. Volume came to 902.74 million shares, compared with 993.95 million traded at the same point Thursday.
The Russell 2000 index, a barometer of smaller company stocks, fell 6.26, or 1.3 percent, to 469.76.
Overseas, Japan's Nikkei stock average finished 0.5 percent higher Friday. In Europe, France's CAC-40 declined 1.3 percent, Britain's FTSE 100 lost 1.4 percent and Germany's DAX index fell 1.7 percent.
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