US stocks skid on concerns about slow hiring; retailers drop
By Marley Jay
NEW YORK — U.S. stocks are taking broad losses Thursday as investors react to mounting evidence that hiring has slowed down based on a report from payroll processor ADP. Health care and technology companies are taking sharp losses. Retailers are falling after L Brands, the parent company of Victoria’s Secret, reported weak sales in June.
KEEPING SCORE: The Standard & Poor’s 500 index dropped 17 points, or 0.7 percent, to 2,415 as of 3:05 p.m. Eastern time. The Dow Jones industrial average fell 116 points, or 0.5 percent, to 21,361. The Nasdaq composite sank 48 points, or 0.8 percent, to 6,102. The Russell 2000 index of smaller-company stocks shed 14 points, or 1 percent, to 1,405.
JOBS: Private U.S. businesses added 158,000 jobs in June, according to payroll processor ADP. That was fewer than analysts expected. Hiring has slowed down in recent months as the number of unemployed people has stayed near historic lows. The government will give a report on public and private job growth on Friday. As investors wondered if economic growth will stay sluggish, consumer-focused companies and technology firms took sharp losses.
“We were expecting a significantly higher growth rate in the second quarter,” said Krishna Memani, chief investment officer at Oppenheimer Fund. “It’s not panning out that way.”
TAKING ILL: All of the health care companies on the S&P 500 lost ground. Biotech drugmaker Amgen declined $2.76, or 1.6 percent, to $171.50 and medical device maker Medtronic lost $1.36, or 1.5 percent, to $87.55. Merck was down $1.02, or 1.6 percent, to $63.14 after it stopped two studies of its cancer drug Keytruda as a treatment for multiple myeloma. Merck said more patients who were treated with Keytruda died, and the Food and Drug Administration halted the studies because the risks of a treatment that included Keytruda outweighed the potential benefits.
Technology companies, which edged higher on Wednesday, turned lower again. Apple sank $1.22 to $142.87 and Intel dropped 56 cents, or 1.6 percent, to $33.78. Electronic storage company Seagate Technology retreated $1.69, or 4.3 percent, to $37.34 and Cisco Systems gave up 36 cents, or 1.2 percent, to $30.75.
RATE WORRIES: Memani said stocks are falling because investors are concerned about the combination of sluggish growth and low inflation with rising interest rates.
“Rates in the U.S. are rising because European rates are rising, and European rates are rising because people think European Central Bank will be tightening policy,” he said. The Federal Reserve has raised interest rates three times in about six months and the ECB could start raising rates soon, too.
SECRET’S OUT: L Brands said its sales fell 6 percent in June as the company continues to struggle with the effects of ending its swimwear business. The stock gave up $7.69, or 14.2 percent, to $46.42, by far the largest loss of any S&P 500 company. Athletic apparel maker Under Armour fell $1.36, or 6.1 percent, to $20.78 and Hanesbrands shed 65 cents, or 2.8 percent, to $22.53. Signet Jewelers lost $2.71, or 4.2 percent, to $61.38.
SHOPPING: The parent company of QVC will buy the Home Shopping Network for about $2.6 billion in stock, and it says the deal will create the third largest e-commerce company in the U.S. Liberty Interactive said it will value QVC at $40.36 a share in the deal. It already owns a 38 percent stake in HSN, which jumped $8.20, or 26.2 percent, to $39.50. Liberty Interactive fell 42 cents, or 1.7 percent, to $24.04.
BONDS: Bond prices skidded. The yield on the 10-year Treasury note rose to 2.37 percent from 2.33 percent. Banks fell less than other stocks, as bond yields mean higher interest rates and larger profits from lending. Investors sold shares of big-dividend stocks like real estate investment trusts and telecommunications companies, as the rising bond yields made those stocks less appealing to investors seeking income.
ENERGY: Benchmark U.S. crude oil rose 39 cents to $45.52 a barrel in New York. Brent crude, used to price international oils, added 32 cents to $48.11 a barrel in London.
Wholesale gasoline added 3 cents to $1.53 a gallon. Heating oil remained at $1.48 a gallon. Natural gas climbed 5 cents to $2.89 per 1,000 cubic feet.
METALS: Gold inched up $1.60 to $1,223.30 an ounce. Silver gained 9 cents to $15.98 an ounce. Copper remained at $2.66 a pound.
CURRENCIES: The dollar slipped to 113.23 yen from 113.35 yen. The euro rose to $1.1419 from $1.1340.
OVERSEAS: Germany’s DAX fell 0.6 percent and the CAC 40 in France was 0.5 percent lower. The British FTSE 100 index lost 0.4 percent. Japan’s Nikkei 225 fell 0.4 percent and the Kospi in South Korea edged down less than 0.1 percent. The Hang Seng of Hong Kong shed 0.2 percent.