Bloomberg News

U.S. Stocks Fall as Optimism Fades After Jobs Report

November 02, 2012

U.S. Stocks Fall as Optimism Fades After American Payrolls Data

The Standard & Poor’s 500 Index fell 0.1 percent 1,425.69 at 10:49 a.m. in New York. Photographer: Scott Eells/Bloomberg

U.S. stocks fell, paring a weekly gain for the Standard & Poor’s 500 Index (SPX), after better-than- forecast payrolls failed to keep commodity and technology shares from slumping as Americans prepared to pick a president.

Newmont Mining Corp. (NEM:US) and Chevron Corp. dropped at least 2.8 percent amid disappointing earnings. American International Group Inc. (AIG:US) fell 7.2 percent as premium revenue slipped at its main units. Apple Inc. (AAPL:US) sank 3.3 percent to a three-month low while First Solar Inc. (FSLR:US) slumped 8.9 percent after the thin-film solar manufacturer said profit fell in the third quarter. Starbucks Corp. (SBUX:US), TripAdvisor Inc. (TRIP:US) and Priceline.com Inc. (PCLN:US) all gained at least 8.3 percent after earnings beat estimates.

The S&P 500 Index fell 0.9 percent 1,414.20 at 4 p.m. in New York. The benchmark gauge reversed a 0.5 percent advance after climbing above 1,434, a level watched by traders because it is the average price over the last 50 days. The Dow Jones Industrial Average dropped 139.46 points, or 1.1 percent, to 13,093.16. Volume for exchange-listed stocks in the U.S. was 6.4 billion shares, or 7.7 percent above the three-month average.

The employment data was a “good report that was met with some skepticism,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, wrote in an e-mail. “This election is still too close to call so it may be tough to make any bets. Between the seesawing job reports, the too-close- to-call election, mounting damage cost from Sandy and our biggest city at 50 percent, markets seem to be at a bewildered and confused point.”

Equities advanced early in the day as a report showed a net 171,000 workers were added to payrolls in October. The median forecast of 91 economists surveyed by Bloomberg called for an advance of 125,000. The jobless rate rose to 7.9 percent from 7.8 percent as more people entered the labor force.

Presidential Election

The report comes before Americans go to the polls on Nov. 6 to decide whether to give President Barack Obama another four years or change course with Republican challenger Mitt Romney.

Stocks have on average rallied 3 percent in the two months following Election Day after a tight race, according to Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co., who cited historical data from the last five elections with close contests. The equity market rallies even more if the challenger wins, he said.

“The uncertainty about who’s going to be our president, regardless of who it is, has been holding back investor conviction,” New York-based Lee said in an interview on Bloomberg Radio today. “People just aren’t holding large positions. Once we get through Election Day, we should really start to see money put to work.”

Economic Reports

The S&P 500 gained 1.1 percent yesterday, the most in seven weeks, as reports on employment and manufacturing topped estimates while consumer confidence climbed in October to a more than four-year high. Today’s loss trimmed the index’s weekly advance to 0.2 percent. Exchanges were shut for the first two days of the week for Hurricane Sandy, the longest weather- related closings in the U.S. since 1888.

Twelve companies in the S&P 500 post results today, according to data compiled by Bloomberg. Earnings have exceeded projections at 71 percent of companies that have released third- quarter results, while sales have trailed estimates at 59 percent of firms, Bloomberg data show.

Commodity shares fell the most among 10 S&P 500 industry groups, sinking at least 1.7 percent. Newmont slumped 8.4 percent to $48.74, the biggest loss since March 2009. The largest U.S. gold producer reported third-quarter profit that missed analysts’ estimates after costs rose more than expected.

Chevron Slides

Chevron (CVX:US) slipped 2.8 percent to $108.37 for the biggest retreat in the Dow. The second-largest U.S. energy company by market value said third-quarter profit declined as output plunged to a four-year low, oil prices slumped and refining income dropped 65 percent.

Chesapeake Energy Corp. (CHK:US) tumbled 7.9 percent to $18.49. The energy producer wrote down $2 billion in natural gas reserves from the Rocky Mountains to the Gulf Coast as prices for the fuel plunged, triggering its biggest net loss in three years. Some asset sales may be delayed as it seeks new buyers, the company said.

AIG declined 7.2 percent to $32.68. The insurer said third- quarter premium revenue at its Chartis property-casualty unit fell 3.2 percent, and the company spent $1.05 on claims and expenses for every premium dollar collected. At SunAmerica life insurers, premiums, deposits and other considerations slid about 19 percent.

First Solar

Technology shares fell 1.5 percent as a group. Apple, the world’s most valuable company, slipped 3.3 percent to $576.80, the lowest since July 26.

First Solar erased 8.9 percent to $22.54. The world’s biggest thin-film solar manufacturer said profit fell in the third quarter as it completed or slowed construction on some solar farms it’s building. Earnings were $1 a share, down from $2.25 a year earlier.

Pitney Bowes Inc. (PBI:US) slumped 13 percent, the most in the S&P 500, to $12.73. The maker of postal meters posted third-quarter profit excluding some items of 47 cents a share, trailing the average analyst estimate by 1 cent.

Fluor Corp. (FLR:US) dropped 9.8 percent to $52.01. The largest publicly traded U.S. construction company reported third-quarter profit that missed analysts’ estimates and said it expects to earn $3.85 to $4.35 a share next year. Analysts estimated $4.35 for 2013 profit, on average, according to a Bloomberg survey.

Guess? Inc. (GES:US) lost 5.8 percent to $24.39. The maker of designer jeans and other clothing said Chief Operating Officer J. Michael Prince and Chief Financial Officer Dennis Secor resigned to pursue other interests. Jefferies Group Inc. cut the stock’s rating to hold from buy.

Consumer Stocks

Starbucks rose 9.1 percent to $50.84. The world’s largest coffee-shop operator said fourth-quarter profit increased as new products helped boost U.S. sales. The company raised its profit forecast for fiscal 2013.

TripAdvisor surged 19 percent, the most in the S&P 500, to $35.12. The online-travel recommendation service spun off from Expedia Inc. last year posted a third-quarter profit of 46 cents a share, topping the average analyst estimate by 4 cents.

Priceline jumped 8.3 percent to $634.74. The most valuable online-travel agency reported profit that topped analysts’ estimates as consumers flocked to the site, assuaging concerns that Europe’s financial crisis would crimp demand.

Washington Post Co. (WPO:US) climbed 5 percent, the most since June 2011, to $356.50. The media company partly owned by billionaire Warren Buffett said third-quarter profit increased as broadcast and cable television revenue helped make up for sluggish results at other divisions.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • NEM
    (Newmont Mining Corp)
    • $27.09 USD
    • 0.23
    • 0.85%
  • AIG
    (American International Group Inc)
    • $56.06 USD
    • 0.33
    • 0.59%
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