U.S. Stocks Expected To Slide At Start On Soft Jobs Data
NEW YORK (MarketWatch) -- U.S. stocks moved towards a lower start after one gauge of employment prompted downward revisions of Friday's employment report.
"The culmination of softer labor market news, particularly from initial jobless claims but also with the ADP data, now point to some downside risks for the payroll report," said Lehman Brothers analyst John Shin.
Dow futures were 63 points lower, at 13,393, while S&P futures declined 10.1 points at 1,479.50 and Nasdaq 100 futures fell 7 points at 2,017.75.
Ahead of the opening bell, the release of the ADP employment report pointed to lackluster jobs growth in the private sector, with August proving to be the slowing month for hiring in four years.
Earlier on, Challenger Gray & Christmas said tens of thousands of jobs were lost in August because of trouble in the mortgage industry, with the outplacement firm's monthly tally of corporate layoffs climbing by 85% in August.
The reports suggest nonfarm payrolls may have grown far slower than the 123,000 anticipated by economists ahead of Friday's report.
"The ADP figure of 38,000 for August translates to a 103,000 nonfarm payroll gain," wrote analysts at Action Economics.
Lehman Brothers trimmed its payroll forecast to 80,000 from 95,000, Shin said.
"Incoming data will continue to be overshadowed by the headlines - as the credit, Fed, housing saga unfolds - the biggest near-term challenge to this thesis is Friday's employment report," said David Ader, U.S. government bond strategist at RBS Greenwich Capital.
For sale
At 10 a.m. Eastern, the National Association of Realtors is set to release its report on pending sales of existing homes.
The Federal Reserve's Beige Book is scheduled for release at 2 p.m. Eastern, with the report offering anecdotal evidence on the troubled housing market and tightening credit conditions.
In another illustration of the recent turmoil in the mortgage business, MGIC Investment Corp. and Radian Group Inc. pulled the plug on merger plans, saying market conditions made the $9.4 billion too difficult.
Overseas, The Bank of England moved to cushion the blow from turmoil in the credit markets, saying it would increase by 6% the reserves each bank can hold with the central bank. The step is expected to help lenders such as Barclays , which has twice in recent weeks sought funding from the Bank of England at a penalty rate.
Crude futures were up 5 cents at $75.13 a barrel, while December-dated gold futures slid $2.20 to $689.30 an ounce.
More active
Food giant Kraft Foods boosted its full-year per-share earnings guidance to a range of $1.60 to $1.62 from $150 to $1.55.
Stocks likely to be active include Yahoo , which agreed late Tuesday to acquire online ad company BlueLithium for 300 million, and Cognos said it would pay $17.87 a share to buy Applix , in a cash deal valued at about $306 million.
Dow component Altria was also in focus, after the tobacco group's downgrade, by Goldman Sachs, to neutral from buy.
And Finisar , with the fiber-optic firm reporting slower-than-forecast quarterly revenue and said second-quarter revenue will miss expectations.
Retail stocks likely to be active include Walgreens , which reported a 6.5% rise in same-store sales in August, Mattel , after a third recall of toys made in China, and Guess , which forecast fiscal-year end earnings at the low-end of forecasts.
By Kate Gibson