Market Snapshot
U.S. stocks slip on services data, rate cuts
SAN FRANCISCO (MarketWatch) -- U.S. stocks closed lower Thursday as investors assessed a poor report on the services sector along with worries about global growth, underlined by three central banks' moves to lower borrowing costs.
The Dow Jones Industrial Average (DJIA) closed down 47.15 points, or 0.4%, at 12,896.67. The decline was an improvement from a 92-point deficit early in the session, but down from when the index briefly climbed into positive territory late in the session to reach 12,961.30.
Stocks got off to a weak start after the Institute for Supply Management said its services index slowed to the weakest level since January 2010 but steadily pared losses as the day wore on. Read more on ISM services.
"I'd argue right now -- and maybe it's short-lived -- that bad news is good news," said Scott Wren, senior equity strategist at Wells Fargo Advisors. "Right now, the worse news you see, the more the market believes the Fed will do something, whereas good economic news makes that more unlikely."
Analyst sentiment is beginning to improve from negative levels seen a month ago, swinging money back into equities, according to Ken Tower, chief market strategist at Quantitative Analysis Service. "It just seems that there's some expectation that economic growth here is improving slowly on top of continued efforts of Europe to stabilize," he said.
Twenty-three of the Dow's 30 components were lower, led by J.P. Morgan Chase & Co. (JPM) , which closed down 4.2%, and
The S&P 500 Index (SPX) declined 6.44 points, or 0.5%, to close at 1,367.58, with financials and energy stocks as the worst performers. Earlier in the session, the S&P 500 touched a low of 1,363.02.
During the session, about 2.8 billion NYSE-listed shares and about 1.3 billion Nasdaq-listed shares traded hands in composite volume. Trading was light following the Wednesday holiday, when U.S. markets were closed for Independence Day.
Some of the best performers in the S&P 500, however, were consumer-discretionary stocks even though June same-stores sales were broadly disappointing. Read more about retail sales.
Shares of
Another factor weighing on stocks was a flood of central-bank actions abroad that trumped some early, positive U.S. data.
China cut interest rates for the second time in less than a month. The Bank of England expanded the size of its quantitative-easing program, while the European Central Bank cut interest rates, as expected. Read more on China's rate cuts.
Also, after the ECB cut rates to a record low of 0.75%, the central bank's president Mario Draghi said downside risks to the euro-area growth outlook have materialized. Read more on ECB, BOE actions.
"The message sent by the coordinated cut in interest rates -- China, ECB and BOE -- reminded traders that global economic conditions remain weak," said Fred Dickson, chief investment strategist at Davidson Cos.
The Nasdaq Composite Index
(COMP)
was virtually flat, closing up 0.04 point, or less than 0.1%, at 2,976.12. Earlier in the session, the index had been down as much as 0.6% but spent most of the day in positive territory. Heavyweight
The U.S. dollar rallied against its major rivals, while the euro (EURUSD) slumped 1% to $1.2391. Read more on currencies.
"On days [when] we find the euro dropping significantly, it's often a sign of 'risk-off' and traders pulling back from cyclical stocks and commodities," Dickson added.
Positive U.S. data didn't provide a boost to stocks earlier in the session. The ADP employment report showed that U.S. private-sector payrolls rose by 176,000 in June, well above expectations. Separate data indicated that weekly jobless claims declined by 14,000 last week to 374,000 -- the lowest level in six weeks. Read more on ADP.
The reports come ahead of Friday's closely watched jobs report from the Labor Department; economists polled by MarketWatch expect nonfarm payrolls to increase by 100,000 in June compared with 69,000 in May. Read preview of June jobs report.
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