Fri, July 02, 2010
Business > Markets

Wall Street edges lower on payrolls and technicals

2010-07-02 15:52:29 GMT2010-07-02 23:52:29 (Beijing Time)

NEW YORK – Wall Street indexes fell slightly on Friday, on track for the worst week in two months, after government data showed the U.S. economy shed jobs in June for the first time this year.

Technical measures on the S&P 500 (.SPX) weakened further after the benchmark index's 50-day moving average broke below its 200-day moving average, indicating more pressure on the downside.

This "death cross" -- a shorter-term average falling below a longer-term average -- last occurred between the 50- and 200-day moving averages in December 2007, soon after the market began a decline that eventually took the S&P 500 to 12-year lows in March 2009.

"I don't necessarily think that that by itself is a signal that we're headed further lower," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

"I think it's a function of increasingly negative sentiment leading to somewhat relentless selling over the last two weeks."

The Dow Jones industrial average (.DJI) dropped 46.43 points, or 0.48 percent, to 9,686.10. The Standard & Poor's 500 Index (.SPX) fell 3.43 points, or 0.33 percent, to 1,023.94. The Nasdaq Composite Index (.IXIC) shed 6.87 points, or 0.33 percent, to 2,094.49.

Non-farm payrolls dropped by 125,000, the largest decline since October, largely because temporary government census jobs decreased by 225,000, the Labor Department said.

The unemployment rate fell to 9.5 percent, the lowest level since July, though this resulted from people leaving the labor force.

Recent data pointing to a wilting recovery had spurred talk of a double-dip recession, raising the employment report's significance. While it showed the economy lost jobs last month, the report was not as weak as the most pessimistic forecasts.

Private hiring rose 83,000, the department said, up from the previous month.

"There were probably fears in the back of some people's minds that the private payrolls could even be worse," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Another drag on the market was data showing U.S. factory orders dropped more than expected in May.

Allergan Inc (AGN.N) and Biogen Idec Inc (BIIB.O) shares rose after analysts cited them as possible targets following a Bloomberg report that Sanofi-Aventis (SASY.PA) was preparing an acquisition of $20 billion or more in the United States.

Allergan rose 8.4 percent to $63 and Biogen traded up 4.6 percent at $48.86.


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