U.S. Stocks Offer Muted Reaction to Central Bank Moves; S&P 500 Snaps 3-Session Win Streak -- FEC

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Date Posted: 17:11:59 07/05/12 Thu
Author: 06/07/2012 7:05AM
Subject:

U.S. Stocks Offer Muted Reaction to Central Bank Moves; S&P 500 Snaps 3-Session Win Streak

U.S. Stocks Offer Muted Reaction to Central Bank Moves; S&P 500 Snaps 3-Session Win Streak
06/07/2012 7:05AM

--DJIA, S&P 500 fall after ECB, BOE, PBOC all boost stimulus

--Investors cite slowing economic growth that spurs moves

--ADP jobs report tops estimates; weekly jobless claims fall

--Attention shifts to Friday's monthly jobs report

(Updates with closing stock prices.)

By Chris Dieterich

NEW YORK--Actions by central bankers to juice the global economy failed to excite investors Thursday. Signs of hope on the U.S. jobs front weren't enough to push stocks higher, either.

The Standard & Poor's 500-stock index dropped 6.44 points, or 0.5%, to 1367.58, while the Dow Jones Industrial Average fell 47.15 points, or 0.4%, to 12896.67. The S&P 500 closed lower for first time in four sessions, capping its biggest three-session rally of the year.

Financial stocks were the worst performing of the S&P 500's 10 sectors, as J.P. Morgan Chase fell $1.50, or 4.2%, to $34.38, and Bank of America declined 24 cents, or 3%, to 7.82.

Consumer discretionary stocks were a point of strength after retailers reported June sales figures. Ross Stores, Limited Brands and TJX all rose more than 3.7%. Kohl's reported a bigger-than-expected drop in comparable-store sales, but its shares jumped 2.77, or 6.3%, 47.03 after the company's chief executive said he was "encouraged" by improved sales in the second half of last month.

The Nasdaq Composite ended essentially flat, up 0.04 point to 2976.12. Netflix surged 9.68, or 13%, to 81.72, padding Tuesday's gains, which came after the company's Chief Executive, Reed Hastings, said Netflix customers streamed more than 1 billion hours of video last month.

A trio of global central banks took action before Thursday's opening bell. The European Central Bank lowered its benchmark lending rate, as expected. The Bank of England kept its key rate unchanged, but increased stimulus measures by boosting the size of its bond-buying program. And China's central bank lowered interest rates for the second time in less than a month.

Initial enthusiasm for the central bank moves faded quickly. Strategists suggested that many investors already had factored in the potential for rate cuts, particularly from the ECB. Some investors expressed disappointment that the ECB stopped short of signaling additional stimulus on top of rate cuts. Others focused on the flagging economic growth that spurred central banks to action.

"On the one hand, we have synchronized action on the part of central banks, and at first you think, 'Wow that's good.' But on second thought, we do seem to have more of a growth problem than meets the eye," said John De Clue, regional investment director and chief international strategist at U.S. Bank Wealth Management.

Most U.S. stocks fell despite two positive reports from the jobs market.

Data on private-sector job growth in June handily topped estimates. The report is seen as a preview to the closely watched monthly government employment report, due Friday. Economists surveyed by Dow Jones Newswires expect Friday's jobs report to show that the economy added 100,000 jobs in June. The unemployment rate is forecast to hold steady at 8.2%.

In separate U.S. economic news, the number of U.S. workers filing for jobless benefits declined last week, and the U.S. services sector slowed more than expected in June.

Thursday's private-sector jobs number "was clearly the big number for the day, and it augurs well for the jobs report [Friday]," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S.

Others were reluctant to ascribe much importance to the first session after U.S. markets were closed in observance of Independence Day.

"It is a light day, the trading is thin," said Steve Sosnick, equity-risk manager of Interactive Brokers' Timber Hill unit, suggesting that investors could have been waiting on the sideline in advance of Friday's jobs report.

European markets were weaker. The Stoxx Europe 600 gave back early gains to fall 0.2%, losing ground for the second session in a row. Asian markets were mostly lower in action that took place before the move by China's central banks. China's Shanghai Composite slumped 1.2% and Japan's Nikkei Stock Average lost 0.3%.

Crude-oil futures fell 0.5% to settle at $87.22 a barrel, while gold futures declined 0.8% to settle at $1608.90 a troy ounce. The U.S. dollar rose to a five-week high against the euro, and also rose versus the yen. The yield on 10-year U.S. Treasury bonds fell to 1.593%.

In corporate news, OraSure Technologies surged 1.26, or 10.4%, to 13.36 after the Food and Drug Administration approved the company's home HIV test, which will be sold in stores starting in October.

June retail sales data hurt shares of some retailers, showing shoppers leaned toward frugality last month.

Teen retailer Buckle slid 1.17, or 3%, to 38.50 after the apparel and footwear retailer reported a decline in June same-store sales compared with expectations for sales to hold steady.

Fred's fell 70 cents, or 4.4%, to 15.11 after the regional discount retailer projected fiscal second-quarter profit at the lower end of its outlook and as same-store sales fell in June, missing expectations.

Cato fell 3.32, or 10.5%, to 28.39 after the company said it expects to report current-quarter earnings at the low end of its initial guidance.

In deal news, Walgreen rose 26 cents, or 0.9%, to 29.87 after agreeing to acquire a regional drugstore chain from Stephen L. LaFrance Holdings and members of the LaFrance family for about $438 million, a push to expand its presence to smaller communities in the mid-South.

-Write to Chris Dieterich at christopher.dieterich@dowjones.com

(END) Dow Jones Newswires

July 05, 2012 17:05 ET (21:05 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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