Stocks were sinking Wednesday after a better-than-expected jobs report in the U.S. failed to counter fears sparked by a weak Spanish bond...
The Dow Jones Industrial Average ($INDU) was down by 158 points, or 1.2%, at 13,042. The S&P 500 ($INX) was down by 16 points, or 1.2%, at 1,397. The Nasdaq ($COMPX) was losing 51 points, or 1.6%, at 3,063.
All but two of the Dow’s 30 components were falling, the biggest laggards being Bank of America (BAC), JPMorgan Chase (JPM) and Alcoa (AA). Only AT&T (T) and Procter & Gamble (PG) were trading higher.
Spain's disappointing debt auction Wednesday is reminding investors that the country could be next to seek a bailout. The auction for three-, four- and eight-year bonds raised 2.6 billion euros, the lower end of the targeted range of 2.5 billion euros to 3.5 billion euros. Investors showed that they were reluctant to hold Spanish debt without a higher risk premium.
Shortly after the sale, Spain's 10-year benchmark bond yield rose to 5.6% from 5.45% Tuesday. London's FTSE was losing 1.4%, and Germany's DAX was falling 2.2%.
Adding to investors' worries, the Institute for Supply Management said its non-manufacturing index, a measure of the service industry, fell to 56 in March from 57.3 in February. Economists surveyed by Bloomberg had prediced the gauge to sink to 56.8. Still, readings of more than 50 indicate the industry is growing.
The services report and bond auction overshadowed positive data on employment. Automatic Data Processing (ADP) said U.S. companies added 209,000 jobs in March, more than the 200,000 economists had predicted, according to Dow Jones Newswires. The number of jobs added in February was revised to 230,000 from 215,000. The ADP report is a precursor to Friday's government employment report.
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In corporate news, General Electric's (GE) credit rating was downgraded a notch by Moody's (MDY) because the agency said it sees risks associated with the funding model of GE's lending unit, General Electric Capital Corp. GE was cut to Aa3 from Aa2. GE Capital's rating was cut by two notches to A1 from Aa2.
JPMorgan Chase (JPM) was forced to pay a $20 million settlement to the Commodity Futures Trading Commission Wednesday, as the CFTC accused the bank of mishandling Lehman Brothers' customer segregated funds leading up to the firm's 2008 bankruptcy. The CFTC suit was the first federal enforcement case to stem from Lehman's downfall.
Seed producer Monsanto (MON) said its fiscal second-quarter profit increased 19% to $1.21 billion, or $2.24 a share, helped by an early planting season in the U.S. That beat analysts' estimates for $2.11. The company boosted its annual profit forecast to $3.49 to $3.54 a share from $3.39 to $3.44.
SanDisk (SNDK), the flash memory company, lowered revenue and gross margin expectations for its fiscal first quarter, citing "weaker than expected pricing and demand." SanDisk said it now sees revenue of roughly $1.2 billion compared to a prior projection of $1.3 billion to $1.35 billion. Analysts are forecasting revenue of $1.34 billion in the quarter, which ends this month.
Yahoo (YHOO) shares were rising after the Internet portal said it was cutting about 2,000 jobs, or 14% of its workforce, to save an estimated $375 million a year, as the company’s new chief executive officer Scott Thompson strives to shore up the company’s profits and sales.
After hitting a new all-time high Tuesday, shares of IBM (IBM) were slipping after the tech giant was downgraded by Bank of America Merrill Lynch to neutral from buy, citing limited valuation and near-term upside. The bank, however, raised IBM's price target to $215 from $205.
May oil futures were giving up $1.33 to $102.68 a barrel, while June gold futures were shedding $47.50 to $1,624.50 an ounce.
The benchmark 10-year Treasury was rising 18/32, diluting the yield to 2.2%, while the U.S. dollar index was up 0.4% to $79.83.
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