U.S. stocks declined after a government report showed that companies added less than half the jobs expected in June, raising concern that the economic expansion is slowing. Technology stocks led the drop after Apple Computer Inc. said its new computers will be delayed and a Deutsche Bank AG analyst said Intel Corp.'s revenue may fall short of forecasts. The S&P 500 shed 4 points (-0.3%) to 1125. The DJIA fell 51 points (-0.5%) to 10,282. The Nasdaq Composite dropped 8 points (-0.4%) to 2,006. The S&P 500 lost 0.8 percent this week for its third consecutive decline. The Dow and the Nasdaq each shed 0.9 percent. Since the start of the year, the S&P 500 has fallen as much as 2.5 percent and risen up to 4.1 percent. The benchmark is now 1.2 percent higher in 2004. Last year at this point, it had climbed 13 percent. Nine stocks rose today for every five that fell on the New York Stock Exchange. Some 1.1 billion shares changed hands on the Big Board in the slowest trading since April 12. Activity was 24 percent below average for the past three months. U.S. markets are closed Monday for the Independence Day holiday.
Weak Sectors: health care service, semiconductor, airline, retail, auto, railroad
Top Stories. . . U.S. employers added 112,000 workers to payrolls in June, less than half the median forecast, and factory employment fell for the first time in five months.
U.S. Treasuries surged, pushing the yield on the benchmark 10-year note to the lowest in more than two months, after the economy in June created less than half the number of jobs forecast by economists.
The dollar tumbled to a three-week low against the euro after the U.S. economy added less than half the number of jobs expected in June.
U.S. stocks declined after companies added less than half the jobs expected in June, raising concern that the economic expansion is slowing.
Credit Suisse First Boston Chief Administrative Officer Thomas Nides, one of John Mack's first hires three years ago, has quit following Mack's departure last week.
Interest Rates, currencies, and commodities. . .U.S. Treasury prices soared to six-month highs and yields dove to two-month lows. The benchmark 10-year note ended 28/32 higher, at 102 9/32, its yield dropping to 4.46 percent. The dollar was weak vs. the euro and reversed lower against the Japanese yen. August gold closed at $398.70 an ounce, up $2.30 for the session, but still $4.50 lower for the week with traders mulling the prospects for the U.S. economy, interest rates and the dollar. August crude closed at $38.39 a barrel on the New York Mercantile Exchange, down 35 cents for the session, but up 85 cents for the week. A surprise fall in last week's crude inventories provided much of the support this week, but prices fell Friday on the heels of a two-session climb of more than $3 a barrel.
Financial markets now expect just three more quarter-point rate hikes from the Federal Reserve this year, according to prices at the Chicago Board of Trade's federal funds futures market. A week ago, the market was giving strong odds that rates would be increased by Fed policymakers to 2.5 percent by January.
Profits. . .On the profit front, Thomson First Call is now using a 21% rise in second-quarter results and gains in productivity, rising demand, and a weak dollar. Ned Riley, strategist for State Street says what has developed is a bunker mentality type of control over expenses and an almost booming environment for demand. The combination has led to these excellent profits.
Healthcare & Medical. . . The Wall Street Journal's Science Journal section discusses diseases that damage the brain, and saying stem cells may be a cure for these diseases. So far, human studies have been disappointing. But now, in one tantalizing study, neuroscientist Kiminobu Sugaya of the University of Central Florida transplanted about 10K human neural stem cells from fetuses into the brains of memory-impaired rats, whose age of 24 months corresponds to a human age of about 80. After the transplant, most of the once-forgetful rats could navigate a water maze, a test of memory, as adeptly as rats one-fourth their age. Even more strikingly, microscopic examination showed that the stem cells had not only differentiated into neurons, but had also "become incorporated into brain areas related to spatial memory," says Sugaya. "It is now feasible to think about incorporating new neurons into the adult brain," says Dr. Jeffrey Macklis of Harvard Medical School. "Though it will be difficult, I think we as a field will be able to rebuild neural circuits." For simple circuits, such as those severed in spinal-cord injury, that may happen within 10 years. Repairing the complex circuits of Alzheimer's may take 30. "In the meantime, we should use anything we have, including embryonic stem cells."
Consumer Electronics. . . Smith Barney upgrades AAPL to Buy from Hold, saying they would be aggressive buyers on this morning's weakness; firm views shipment delays on the new flat panel iMac as a temporary issue and a buying opportunity; firm remains well above consensus for FY05-06 ests, and says catalysts up until year-end include the launch of iPod mini in Europe in July, download data updates from the recent launch of iTunes in Europe, iPod orders from new partner H-P beginning in July, volume shipments of the new PowerMac G5 in calendar Q3, the launch of the new flat panel iMac late in calendar Q3, and the opening of additional retail stores in Europe. Maintains $37 target.
Semiconductors. . . Deutsche downgrades Intel to Hold from Buy. In firm's opinion, supply chain uncertainties surrounding the Grantsdale chipset and Taiwan MB shipments have put INTC's 3Q D/T growth at risk. Firm lowering Q3 est to reflect this risk and reducing tgt to $28 from $33... would consider stock attractive in $24-25 range... firm reduces Q3 top-line growth est to 5.7% from 7.7% and EPS est to $0.30 from $0.32 (Reuters consensus $0.32).
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