U.S. Stocks Drop on Unexpected Loss of Jobs; Energy Shares Fall
By Elizabeth Stanton
U.S. stocks fell for a second day after the biggest drop in jobs since 2003 sent energy and mining shares lower, overshadowing a Federal Reserve plan to make more cash available to lenders.
Chevron Corp. and Alcoa Inc. led declines that sent the Dow Jones Industrial Average below 12,000 for the first time since January. Boeing Co., the second-biggest maker of commercial aircraft, slid the most in two months on concern a new plane will be delayed. Bank of America Corp. rose, leading financial shares to their first advance in seven days.
The Standard & Poor's 500 Index retreated 10.2 points, or 0.8 percent, to 1,294.14 at 12:39 p.m. in New York. The Dow average lost 107.62, or 0.9 percent, to 11,932.77. The Nasdaq Composite Index decreased 9.37, or 0.4 percent, to 2,211.13. Three stocks fell for every one that rose on the New York Stock Exchange.
``This is definitely bad news,'' Ed Peters, chief investment officer at PanAgora Asset Management in Boston, which manages $25 billion, said of the jobs report. ``It increases the chance for a real recession happening if consumers start to pull back significantly.''
The S&P 500 extended its weekly decline to 2.7 percent after the Labor Department reported a loss of 63,000 jobs last month, defying economists forecasts for a gain of 23,000. The benchmark for U.S. equities is down 12 percent this year on concern that the first decline in home prices since the Great Depression and record foreclosures will increase bank losses and limit lending.
Alcoa fell $1.95, or 5.1 percent, to $36.42 for the biggest decline in the Dow average. Analysts at Friedman, Billings, Ramsey & Co. lowered their recommendation to ``market perform'' from ``outperform,'' citing concern metal prices will decline. The brokerage also downgraded Freeport-McMoRan Copper & Gold Inc. to ``market perform,'' sending shares of the world's second- largest copper producer down $4.34 to $100.
Energy companies contributed the most to the S&P 500's decline, led by providers of services to the oil industry. Schlumberger Ltd., the biggest oilfield-support company, slipped $2.98 to $84.68. Smith International Inc., the fourth-largest, dropped $2.60 to $61.19. Chevron, the second-biggest energy company, slumped $2.03 to $85.77.
Boeing slid $2.30 to $77.21. The world's second-biggest maker of commercial jets may further postpone delivery of its 787 Dreamliner by several months to the second half of 2009, according to Goldman Sachs Group Inc. analyst Richard Safran.
Banks and brokerage firms limited the decline. Before the jobs report, the Fed announced additional measures to enable financial institutions to make loans. Banks and securities firms have posted losses exceeding $181 billion since the start of last year as the impact of surging defaults on subprime mortgages rippled through world financial markets.
Wells Fargo, the biggest bank on the U.S. West Coast, added 38 cents to $28.21. Bank of America, the largest U.S. bank, climbed 6 cents to $37.66.
The central bank increased to $50 billion each from $30 billion the amount intended for auctions of funds planned for March 10 and March 24. The Fed also will make $100 billion available through weekly 28-day repurchase agreements, where the central bank lends cash in return for assets such as Treasuries.
Financial shares also gained as traders boosted bets the Fed will cut the benchmark interest rate by three-quarters of a percentage point by March 18, the date of its next scheduled monetary policy meeting. Interest-rate futures show 98 percent of wagers are on a reduction to 2.25 percent, up from 74 percent yesterday. The remaining bets are on a half-point cut to 2.5 percent.
Ciena, National Semi
Ciena Corp. rose the most in the S&P 500, adding $2.68, or 11 percent, to $27.62. The maker of networking equipment said first-quarter profit more than doubled as phone companies spent more on upgrades, and boosted its sales forecast.
National Semiconductor Corp. gained 95 cents to $17.29 for the second-biggest advance in the S&P 500. The maker of chips for devices such as Apple Inc.'s iPhone reported third-quarter profit that beat analysts' estimates and said profitability probably will improve in the current period.