In a shortened session, the Dow Jones industrial average was down 72.21 points, or 0.79%, to 9,070.63. The broader Standard & Poor's 500 index shed 8.04 points, or 0.81%, to 985.71. The tech-heavy Nasdaq composite index lost 15.28 points, or 0.91%, to 1,663.45. The Dow gained 1% over the week while the Nasdaq jumped 2.7%. The markets will be closed Friday for the July 4 holiday.
Investors digested employment data that continues to show weakness. U.S. non-farm payrolls fell 30,000 in June, from a revised May loss of 70,000. The unemployment rate jumped from 6.1% to 6.4%, a higher uptick than expected and its highest level in nine years. According to economic research outfit MMS International, "One reason for the big jump in the unemployment rate appears to be the influx of students into the labor force with school ending."
In other downbeat labor market news Thursday, intial jobless claims rose 21,000 to 430,000 in the week ended June 28. Weekly jobless claims have stayed above 400,000 for 21 consecutive weeks.
However, economists continue to be encouraged by signs of improvement. For example, the services sector showed strength. The ISM services index jumped from 54.5 in May to 60.6 in June, its best level since Sept. 2000. Key components showed impressive gains with new orders rising to 57.5 from 50.6 and employment climbing to 50.3 from 48.7. Prices rose to 51.4 from 49.6.
"Pessimistic headlines really just signal extended labor market weakness as many economists assumed, and provide no fresh evidence that the economy is failing to accelerate as we enter the second half of 2003," says MMS.
Next week, investors will get earnings updates from Lone Star Steakhouse (STAR
) on Monday, Pepsi Bottling Group (PBG
) and Alcoa (AA
) on Tuesday, and Yahoo! (YHOO
) and Genentech (DNA
) on Wednesday.
Earnings from Abbott Labs (ABT
) and SunTrust (STI
) are due Thursday, and General Electric (GE
) is set to report on Friday.
Among economic reports next week, investors will get updaates on inventories, export and import prices, weekly jobless claims and producer price index.
In company news Thursday, medical device maker Boston Scientific (BSX
) warned of lower earnings in 2003. The company said revenue increases would be in line with expectations, but expenses would be higher.
In technology news, business software maker Siebel Systems (SEBL
) warned that second-quarter earnings would miss analyst expectations as customers have delayed making purchasing decisions amid economic uncertainty.
High-end consumer electronics chain Tweeter Entertainment (TWTR
) said its third-quarter loss would be bigger than Wall Street had expected. It will be the third straight quarter of worse-than-expected results.
On the commodities front, oil prices spiked, as labor unrest contributed to concerns about a supply disruption in Nigeria.
Treasury prices ended lower Thursday in a shortened session ahead of the July 4 holiday. Price action was typically volatile following a rare Thursday release of the June payrolls report (the market is closed Friday). Bonds began the session on the defensive thanks to overseas bond market angst. They rotated to highs on the weak June unemployment figure, then rolled back over again on a sharp gain in the ISM services index, and its firmer components.
European markets were mixed Thursday on weakness in U.S. markets. In London, the Financial Times-Stock Exchange 100 finished up 17.90 points, or 0.45%, to 4,024.80.
In Germany, the DAX Index shed 17.39 points, or 0.54%, to 3,223.65 after Heidelberger Druckmaschinen gave a negative forecast. German carmakers were strong on optimism that a stronger dollar will boost exports. In France, the CAC 40 finished higher by 13.02 points, or 0.42%, to 3,092.09.
In Asia, major stock indexes ended higher. Japan's Nikkei index finished up 32.56 points, or 0.34%, to 9,624.8. Meanwhile, Hong Kong's Hang Seng index rose 43.48 points, or 0.45%, to 9,646.1.