U.S. Stocks Fall Ahead of Payrolls Data

Indexes slumped Thursday after a surprising drop in a service-sector gauge. The market's focus Friday: the U.S. jobs report for November

By Mary Childs

Dec. 3 (Bloomberg) -- U.S. stocks declined, breaking a three-day winning streak for the Standard & Poor's 500 Index, after an unexpected contraction in service industries spurred concern about the economic recovery a day before the government's November jobs report.

Financial institutions led the retreat in the S&P 500 as Bank of America Corp. (BAC) prepared to sell more than $18 billion in equity to repay government bailout funds. American Express Co. (AXP) lost 5.3 percent after the Institute for Supply Management's index of non-manufacturing businesses missed the median economist estimate. Abercrombie & Fitch Co. (ANF) led retailers lower after reporting a decrease in November sales.

The S&P 500 retreated 0.8 percent to 1,099.92 at 4 p.m. in New York after climbing as much as 0.7 percent. The Dow Jones Industrial Average slumped 86.53 points, or 0.8 percent, to 10,366.15.

"It's a fragile recovery," said Mirko Mikelic, who helps manage $19 billion at Fifth Third Asset Management in Grand Rapids, Michigan. "All the jobs we lost at the beginning of this recession may not be recovered till 2012, 2013, so it's going to be longer versus in the past."

Stocks rose at the start of trading after Bank of America, the nation's biggest lender, agreed to repay $45 billion to the government. The S&P 500 also advanced after the Labor Department said the number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest level in more than a year.

"Tick Upward"

A private report on payrolls suggests the nation's unemployment rate "might tick upward" when the number is reported tomorrow, White House press secretary Robert Gibbs said today. Gibbs cited a report from ADP Employer Services yesterday that companies in the U.S. cut more jobs than forecast in November. Gibbs said he hasn't seen the Labor Department data and doesn't know what the report will show.

Economists project the jobless rate will remain at a 26- year high of 10.2 percent, according to the median estimate in a Bloomberg survey.

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