(As of 8:03 am pacific)
Stocks opened lower as economic and jobs data disappoints. Payroll processor, ADP, reported this morning
that private-sector payrolls increased 133,000 in May from a downward revised
113,000 in April. Private sector job
growth appears to be slowing down in the 2nd quarter as the average
monthly gain thus far is 123,000 jobs added per month. In the 1st quarter 200,000 private
sector jobs were added per month. The US
Labor Dept. reported that US jobless claims (people filing for unemployment
benefits) rose 10,000 last week to 383,000 as claims from 2 weeks ago were
revised up from 370,000 to 373,000.
Economists had expected jobless claims to remain level at 370,000. According to the Commerce Dept. US GDP growth
for the 1st quarter was revised downward to 1.9%, slower than the
originally estimated 2.2% growth.
Economists expected a drop to 1.8% and are forecasting a pick up in
growth in the 2nd quarter to 2.2% annualized. A disappointing surprise was that consumer
spending was revised downward from a 2.9% gain to a 2.7% gain in the 1st
quarter. Lastly, and perhaps the most
surprising report of the morning was that Chicago PMI (an index that measures
business activity in the Chicago area) fell 3.5 points to 52.7 in May from 56.2
in April, recording its lowest level since September 2009. European stocks started their trading session
up from yesterday’s lows, but quickly turned lower as US economic reports
disappointed investors. Trading volumes in
Europe were low, indicating investors are nervous about stocks and looking more
to safe havens. Asian stocks stumbled on
European fears, especially those issues facing Spain, Italy and Greece. Oil prices shed 1.22% to 86.68 while gold
lost 0.22% to 1562. The US dollar was
mixed and the 10 yr. treasury fell to 1.60%.
30 yr. mortgage rates dipped slightly to 3.76%. The volatility index (VIX) added 3.36% to
24.95. The month of May has not been
kind to markets or investors. Going into
today, the S&P 500 was down 6.1%.
