Disappointing news about employment and the services sector caused selling after the last few days of gains
Stocks finished lower Wednesday amid disappointing economic news about the jobs market and services industries. The ADP report showed private employment fell 371,000 in July, adding to investors' anxiety about Friday's employment report.
The July U.S. ISM services index, which had risen for the last three months, fell to 46.4 in July from 47.0 in June. The data was weaker than the modest increase to 48.2 that markets expected. Weakness was broad-based: Employment fell to 41.5 from 43.4, while new orders slipped to 48.1 from 48.6. Prices paid plunged to 41.3 from 53.7.
Factory orders rose 0.4% in June, much better than the 1% decline expected by markets. It was the fourth rise in the past five months.
On Wednesday, the 30-stock Dow Jones industrial average snapped a four-day winning streak, finishing with a loss of 39.22 points, or 0.42%, to 9,280.97. The broad Standard & Poor's 500-stock index lost 2.93 points, or 0.29%, to 1,002.72. And the tech-heavy Nasdaq composite index declined 18.26 points, or 0.91%, to 1,993.05.
Treasuries tumbled, with the 10-year notes at 95-05/32 for yield 3.726%, as the Fed sets a record third quarter refunding. The dollar index was down 0.26 to 77.50. Aug. gold lower at $969.50. Crude oil rose to $71.84, following the DOE report.
While the major indexes succumbed to profit taking, AIG (AIG) and other financial companies were strong ahead of AIG's second quarter earnings report, due out Aug. 7.
Among stocks in the news Wednesday, Procter & Gamble (PG) shares were lower after it reported weaker-than-expected sales for its latest quarter. The maker of Tide detergent and other consumer brands posted $0.80, vs. $0.90 a year ago, fourth quarter EPS from continuing operations. on 11% revenue decline. The Street was looking for $0.79. It sees first quarter sales down 7%-10% (including forex) and EPS from continuing operations of $0.95-$1.00; fiscal year 10 sales down zero to 3% (including forex) and EPS of $3.65-$3.80.
Whole Foods Market (WFMI) reported $0.25, vs. $0.24, third quarter EPS on 2% total sales increase, improved gross profit. Same-store sales decreased 2.5%. It says July comparable-store sales (including forex impact) fell 1.1% and identical-store sales fell 2.7%. If company's comparable- and identical-store sales in fourth quarter are in line with its QTD results, total sales growth would be about 2.9% for fourth quarter and about 1% for fiscal year 2009. Sees fourth quarter EPS of $0.16-$0.18, fiscal year 2009 EPS of $0.80-$0.82, vs. previous fiscal year 2009 EPS of $0.65-$0.70.
Sotheby's (BID) posted $0.18, vs. $1.14, second quarter EPS on 48% lower revenue. It tied the year-over-year revenue drop mostly to a decline in net auction sales attributable to the downturn in the global economy and international art market. The company said it is on track to achieve the $160 million in cost savings in 2009 vs. 2008 it had announced last quarter. It also expects to close a new three-year $150 million revolving credit facility with GE Capital later this month.
Citigroup (C) shares were up about 10%. The Singapore Business Times reports that the bank's CEO Vikram Pandit said that in addition to the more than 20 businesses the company has already sold, it plans to sell another 20 - largely in the consumer finance area, many of them in Europe. "A big reason for that is there has been a shift in the consumer finance markets," he said. "There is less funding availability and they're probably less robust as businesses."
4Kids Entertainment (KDE) says it has retained Montgomery & Co. to assist it in evaluating strategic initiatives.
CF Industries Holdings (CF) says its board of directors is prepared to increase its offer for a business combination with Terra Industries (TRA) to a fixed exchange ratio of 0.465 CF shares for each TRA share. CF board also prepared to return at least $1 billion of cash to stockholders of the combined company following the closing of the transaction, which likely would be accomplished through open market purchases or a self-tender offer.
Devon Energy (DVN) posted $0.70, vs. $2.88, second quarter EPS on 41% revenue decline. Street was looking for $0.59. Says production of oil, natural gas and natural gas liquids increased 12% to a record 65.4 million oil-equivalent barrels (Boe) in second quarter.
Baker Hughes (BHI) posted $0.28, vs. $1.23, second quarter EPS on 22% revenue drop.
Conseco (CNO) reported $0.22, vs. $0.13, second quarter operating EPS on flat total revenue. It says the results are at the high end of the preliminary earnings range the company announced last week.
Foster Wheeler AG (FWLT) posted $0.96, vs. $1.11, second quarter EPS on 23% operating revenue decline. The Street was looking for $0.62.