After The Close - The first day of the new month was a most forgettable one for those long equities. The bulls, who struggled mightily in May, were once again forced to absorb another round of body blows from the bears today. The punches came in the form of some dour news on domestic economy, a shaky situation in the euro zone—much of which is now mired in a recession—and more signs of slowing growth in China, the world’s second-largest economy. When all was said and done, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were down 276, 80, and 32 points, respectively. The noteworthy statement by the bears was reflected in the more than five-to-one spread of declining stocks over advancing issues on both the Big Board and the NASDAQ.

Disquieting news on the U.S. economy—punctuated by a dismal report on jobs creation from the government—was the primary culprit behind today’s sharp selloff. Specifically, the Labor Department reported that the nation added just 69,000 jobs in May, less than half the forecast increase of 155,000, while the unemployment rate edged up to 8.2% from the prior month's reading of 8.1%. Then word came a half hour into the trading session that manufacturing activity grew at a slower rate last month. These reports, along with a weaker-than-expected report on consumer confidence earlier this week, have unnerved investors and prompted the latest setback. Today’s sharp selloff comes on the heels of declines of 6.2%, 7.2%, and 6.3% for the Dow 30, NASDAQ, and the S&P 500 Index, respectively, last month.

The selling was all encompassing, with each of the 12 major sectors deep into negative territory at the closing bell. Not surprisingly, the performance of those groups closely tied to the health of the global economy struggled the most. The capital goods, conglomerate, energy, financial, transportation, technology, and consumer cyclical sectors were down more than 2% each, with the latter sector suffering the biggest setback. A lackluster report on personal income and spending (issued at 8:30 A.M. EDT) may have had something to do with the sharp drop in consumer cyclical stocks. Within the space, notable decliners included the shares of Under Armour (UA), Tempur-Pedic (TPX), BorgWarner (BWA), and Coach (COH), among others.

Meanwhile, the news from overseas has not lent any support to trading over the last fortnight—and that trend continued today. The soap opera in the euro zone—which includes several nations in a recession and sizable sovereign-debt problems for Greece, Spain, and Italy—and recent data showing China’s economy is slowing has unnerved investors both in those regions, and over here. The European bourses—which included a 3.4% decline in Germany’s DAX—and the Asian indexes were hit hard today.

The global economic struggles are also taking a big toll on the commodities markets. The price of crude oil tumbled again, finishing the session down more than $3 a barrel on the New York Mercantile Exchange. Other notable decliners included contracts for oats, rice, cotton, lumber, and orange juice. Those futures were the biggest decliners in a market beset by red ink. The only notable gain was in the price of gold, which rallied as skittish investors sought the precious metal as a safe-haven instrument.

Not surprisingly, the demand for fixed-income securities skyrocketed today, as investors adhered to a “flight-to-safety” strategy around the globe. In fact, the yield on the benchmark 10-year Treasury note, which moves in the opposite direction to the price, fell precipitously, ending the day at a record low 1.47%.

Looking ahead to next week, the situation in Europe and the continued concerns about the domestic economy will draw the lion’s share of the investment community’s attention. In Europe, the sovereign-debt problems will likely remain at the forefront, especially as financially challenged Greece moves closer to its elections. The European Central Bank also begins its two-day policy meetings on Wednesday. Meantime, on these shores, the economic news will be plentiful, with reports on non-manufacturing activity (Tuesday), productivity (Wednesday), initial weekly unemployment claims (Thursday), and the trade gap (Friday). We will also receive the latest Federal Reserve Beige Book summation in mid-week. – William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.       


2:30 PM ET - It is all coming apart at the seams today on Wall Street. Indeed, after the equity futures indicated a notably lower opening for the current session in the pre-market hours, on some troubling manufacturing news out of China and the euro zone, the U.S. Labor Department weighed in with its own warnings about the economy when it issued disheartening metrics on the employment front.

Specifically, Washington reported that non-farm payrolls increased by just 69,000 in May, less than half the 155,000 gain that had been estimated. Moreover, data for March and April were revised downward, while the jobless rate ticked up from 8.1% to 8.2% in the latest month, which ended yesterday.

That one-two punch pummeled the stock market at the start of the trading day, and unlike most recent sessions, there was virtually no attempt to reverse course even a little. In fact, when the Institute for Supply Management noted that the growth in manufacturing activity last month had slowed, the market fell even further, going from a loss of about 200 points on the Dow Jones Industrial Average in mid-morning, to a decline of some 280 points as we near the 90-minute mark left to the trading day. 

Besides the Dow, we are seeing a 30-point loss in the Standard and Poor's 500 Index and a drop of 75 points in the tech-heavy NASDAQ. Moreover, losing stocks are swamping winning issues by about six-to-one on the Big Board and by five-to-one on the NASDAQ, while the ratio of new lows to new highs on both exchanges is in the range of about four to one. The S&P 500 Index has, moreover, fallen 20 points below the 1,300 support zone, while the NASDAQ is now approaching 2,750 and heading lower. The bears seem unrelenting at this point in the day, and it will take some real courage for the bulls to aggressively step in as we wind down the week.  - Harvey S. Katz 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.   


12:15 PM ET - The U.S. stock market opened sharply lower this morning, after traders received a weak economic report.  Specifically, non-farm payrolls increased by 69,000 during the month of May, falling well short of the 155,000 figure economists had expected. The private payroll numbers were also a sharp disappointment. Moreover, the widely-watched unemployment rate, now at 8.2%, also came in higher than many had anticipated. The report does not come as a big surprise, given that we have been seeing some unimpressive employment-related figures lately. Further, the ISM Manufacturing Index for the month of May also provided a lackluster reading, suggesting that the economy here at home is softening.

Elsewhere, the situation in Europe is doing little to help matters. On the Continent, the bourses are finishing up another abysmal session. Losses on Germany’s DAX exceeded 3%, with significant declines on France’s CAC-40 and on Britain’s FTSE 100. Weak economic reports, as well as ongoing concerns about the region’s banking system, were largely to blame.

In corporate news, technology company OmniVision (OVTI) posted weaker-than-anticipated profits, sending that stock sharply lower.  Elsewhere, BP (BP) stock is up on reports that the British oil giant may consider selling its interest in a Russian joint venture.

At roughly noon in New York, the Dow Jones Industrial Average is off 185 points (-1.5%); the S&P 500 Index is down 22 points (-1.7%); and the NASDAQ is lower by 57 points (-2.0%).  Market breadth is sharply negative, as declining stocks are outnumbering advancers by about 6 to 1 on the NYSE. All the major market sectors are in negative territory, with weakness in the capital goods, technology, and financial sectors most pronounced. However, there is some relative strength in the utility shares again today.

Technically, the S&P 500 Index has broken through the 1,300 zone, moving below the correction low reached in early May. Unfortunately, the rally attempt that started a few days ago seems to have failed to result in any sustained move higher. The S&P 500 Index is now sitting on its 200-day moving average located at 1,285, which is a crucial technical area of support. Notably, recently, trading volumes have been stronger on days when the market has closed lower, suggesting that the bears have the upper hand. Some fear has likely been rekindled, as the VIX is now near 25, after reaching very low levels during the market’s run up in March and April.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


10:00 AM ET - The old Wall Street adage, "Sell in May and Go Away," so on the mark thus far this year, at least for the first 31 days of this stretch, might now give way to talk of the "June Swoon" on Wall Street, if the action in the markets over the first 30 minutes, or so, of the new month is a harbinger of things to come.

Specifically, just after the opening this morning, the Dow Jones Industrial Average has plummeted almost 200 points; the Standard and Poor's 500 Index has shed 23 points, sending that index below the presumed support at 1,300; and the NASDAQ has tumbled by more than 50 points. The small- and mid-cap indexes are also pressing lower, and doing so decisively. Meanwhile, on the NYSE, declining issues are beating advancing stocks by eight-to-one, with 153 new lows and just 25 new highs on the Big Board so far this morning.  

Behind this latest selloff is a dire employment report. Specifically, at 8:30 (EDT) this morning, the U.S. Labor Department reported that the nation had created just 69,000 jobs in May, less than half the expected 155,000. Also, Labor intoned that the unemployment rate edged up from 8.1% to 8.2% last month. Moreover, the estimated non-farm payrolls gains for March and April were revised downward, and rather substantially--especially for April.

Thus, armed with these underwhelming figures and with the additional burden of falling manufacturing activity in China and the euro zone, U.S. equities are getting punished at this hour. At the same time, bonds are soaring and interest rates are falling, with the yield on the 10-year Treasury note declining to a record low of 1.48%. It is not very pretty out there so far today--at least for those long equities.   - Harvey S. Katz 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned. 


Stocks to Watch from The Survey The earnings calendar is very light today, though investors are going over April-quarter financials from OmniVision Technologies (OVTI), a supplier of CMOS-based imaging chips to the cellular phone and surveillance markets. They appear disappointed with the company’s results and outlook, as the stock is trading down sharply in a very weak premarket, pushed lower on the heels of a troubling report on non-farm payrolls. Shares of Modine Manufacturing (MOD) are also down sharply in pre-market trading, after the maker of heating and cooling systems for the automotive industry announced March-period results and said that it has agreed to buy privately-held Geofinity Manufacturing, a producer of geothermal heat pumps. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - It was another frenetic day on Wall Street yesterday, making it three sessions in a row in which already skittish investors became even more unsettled by the goings on in the financial markets worldwide. Here's a recap: On Tuesday, following the long three-day Memorial Day Weekend, the Dow Jones Industrial Average led a generally powerful upturn in stocks, rising 126 points. That gain evolved in spite of another difficult news day in the euro zone. The catalyst for the large gain over here was optimism that a series of economic reports due out over the course of this week in the United States would be supportive to continued solid GDP growth stateside.

Then, on Tuesday, further bad news abroad, in particular a rise in bond yields in Spain and Italy, started the U.S. stock market off on the wrong foot. Then, when the Conference Board chimed in with a less-than-stellar report on consumer confidence, the bears went to town, dragging the aforementioned Dow down by 161 points on the day.

Then, yesterday, fresh off that late-May swoon, bond yields rose again on the Continent, while the economy at home evidenced a less-than-ebullient look, with a trio of disappointing metrics, starting with the report of a less-than-hoped for gain in private-sector payrolls issued by Automatic Data Processing (ADP). In addition, the government noted that weekly jobless claims rose by 10,000 in the latest seven-day stretch, while the Commerce Department reported that revised first-quarter GDP showed a gain of just 1.9%. Earlier, the quarter's growth had been estimated at 2.2%.

Add in angst ahead of today's reports on non-farm payrolls for May, the unemployment situation, data on personal income and personal consumption expenditures, and a survey on manufacturing activity for the just-concluded month, and stocks tumbled anew, with the Dow pushing down by just over a hundred points in mid-morning. The NASDAQ, too, skidded early in the day, losing some 35 points at its nadir. However, by early afternoon, the bulls stepped in, and as often happens at the end of a month, there was some window dressing and bargain hunting at work, and the losses were erased for a time, with the Dow jumping into the plus column with a spirited gain of some 70 points by late afternoon. However, that late pickup could not be sustained ahead of the forthcoming data, so that index fell back once more and by the session's close it was off by 26 points. The Standard and Poor's 500 Index shed three points and the NASDAQ eased by 10 points. All told, such volatility does little for investor confidence.

Meanwhile, notwithstanding the weak May performance, we did see new 52-week highs set yesterday by old-line communications giant and Dow-30 component AT&T (TFree AT&T Stock Report), retailing behemoth and Dow stock Wal-Mart Stores (WMTFree Wal-Mart Stock Report), and entertainment stalwart and Dow member Walt Disney (DISFree Disney Stock Report). In fact, even Facebook (FB), which debuted in uninspiring fashion just over a week ago, and which set another new low during the session falling to $26.83 a share at one point, steadied itself to close with a gain $1.41 a share on the day, to end the session at $29.60.

All of this has set the market up for what may well be another eventful session, as the U.S. government has just issued data showing that the nation added just 69,000 jobs last month, which was less than half the forecast increase of 155,000, while the jobless rate ticked up from 8.1% to 8.2%. That, too, was worse than expected. Meanwhile, modest increases were reported for personal income and consumer spending. Then, later this morning, the Institute for Supply Management will issue its monthly data on the manufacturing sector, where a slight easing in growth is anticipated.

For now, though, the in-line employment result is proving anything but helpful for the stock market, where weak data from China's manufacturing sector, another dour indication from a similar survey in the euro zone, and news that federal regulators are widening their probe of trading blunders at JPMorgan Chase (JPM - Free JPMorgan Stock Report) had already been pressuring the U.S. equity futures. Now, following this weak employment survey, the futures are really getting pummeled. In all, the S&P 500 Index futures are off 27 points and the NASDAQ futures are down 46 points, thereby clearly setting the stage for what looks like a dreadful opening for Wall Street when the new month's trading gets under way in less than an hour from now. We'll see where we go from there. Stay tuned. - Harvey S. Katz 

At the time of this article's writing, the author had positions in T and DIS.