June 5, 2013, 11:19 a.m. EDT
U.S. stocks extend drop into second day
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By Kate Gibson,
MarketWatch
NEW YORK (MarketWatch) — U.S. stocks declined sharply on
Wednesday, extending losses into a second day, as data found U.S. private-sector
job growth and productivity below expectations.
“More attention is being brought to the economic data, so everyone can play
Nostradamus and guess what the Fed’s next move will be,” Mark Luschini, chief
investment strategist at Janney Montgomery Scott, said of ongoing guessing as to
when the Federal Reserve would begin tapering its $85 billion in monthly bond
purchases.
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• Madoff, other felons say markets are rigged
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The S&P 500 index (SNC:SPX) declined 15.14 points to 1,616.24, with materials and utilities leading losses that included all of its 10 major industry groups.
A Dell Inc. (NASDAQ:DELL) board panel found Carl Icahn’s takeover bid to be short due to an estimated $3.9 billion funding deficit necessary to pay a proposed dividend and operate the PC maker.
Apple Inc. (NASDAQ:AAPL) shares slid 1.2% after the International Trade Commission found the iPhone maker infringed on a Samsung Electronics Co. patent, with Apple facing a possible import ban on some products.
General Motors Co. (NYSE:GM) lost ground after the U.S. Treasury said it would sell 30 million more shares of the car manufacturer’s common stock.
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For every share rising, more than three lost ground on the New York Stock Exchange, where 191 million shares traded as of 11:10 a.m. Eastern.
Composite volume surpassed 1 billion.
Gold (CNS:GCQ3) and oil (NMN:CLN3) prices rose; the U.S. dollar (NYE:DXY) declined and the yield on the 10-year Treasury note (TICKER:10_YEAR) used in determining mortgage rates and other consumer loans fell to 2.095%.
U.S. companies created 135,000 jobs in May, according to ADP Employer Services.
“The market is in the midst of a bit of a correction, so the bias is lower anyway. But with the ADP report being as underwhelming as it was, there is an increasing loss of enthusiasm for equities at the moment,” said Janney Montgomery Scott’s Luschini.
Watch for Callaway, Salesforce
John Shipman takes a look at the stocks traders will be keeping an eye on in market action, including Callaway Golf, Salesforce and General Motors.“The market is playing wait-and-see with Friday’s numbers, but certainly the ADP number that came out showed there is probably moderate downside risk to that May employment number,” said Sean Lynch, global investment strategist for Wells Fargo Private Bank.
Another report, this one from the Institute for Supply Management, found a slight acceleration in service-sector activity in May.
Also Wednesday, the Commerce Department reported orders for goods made by U.S. factories rose 1% in April.
At 2 p.m. Eastern, the Fed’s Beige Book of anecdotes about the economy, which is prepared ahead of an interest-rate decision, will be released. The last Beige Book said the U.S. economy expanded at a “moderate” pace.
On Tuesday, Fed Bank of Kansas City President Esther George advocated for the Fed to pare back its bond-buying program, and Dallas Fed President Richard Fisher stepped up his criticism of the Fed’s easy-money program.
Strategists at Credit Suisse said Wednesday that they see 15% more upside for stocks. They lifted their S&P 500 (SNC:SPX) year-end target to 1,730 from 1,640 and introduced a new target of 1,900 for the end of 2014. The strategists gave five reasons for staying overweight in equities, including an overly pessimistic view on when the Fed will curb its bond-buying program. Read more on Credit Suisse's equity call
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