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Stocks Slide After Jobs, Factory Reports

Published: Friday, 2 Jul 2010 | 12:27 PM ET

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By: CNBC.com with Reuters

Stocks skidded Friday after disappointing reports on jobs and factory orders.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

Consumer discretionary, financials and industrials were among the biggest declienrs.

The Dow Jones Industrial Average was down more than 70 points after bobbing in and out of positive territory this morning.

Disney [DIS Loading... ()], GE [GE Loading... ()] and Bank of America[BAC Loading... ()] were the Dow's bottom three.

Verizon [VZ Loading... ()] and Johnson and Johnson [JNJ Loading... ()] were among the few Dow gainers.

Factory orders fell 1.4 percent May, nearly triple of what economists had expected.

The report is another blow to the recovery as early signs had indicated that manufacturing was leading this recovery even as the consumer remained sluggish.

Employers slashed 125,000 jobs from nonfarm payrolls last month, about 10,000 more than expected, while the unemployment rate, which is based on a household survey, actually slipped to 9.5 percent. It was the first decline in payrolls in six months.

Within that report, manufacturing hiring actually rose by 9,000, though construction hiring fell by 22,000. Private hiring overall rose 83,000. The biggest drag was loss of 225,000 temporary Census workers.

FOR INVESTORS

The dollar struggled against the euro, holding near five-week lows, after a big short squeeze in the European currency ahead of U.S. jobs data.

Technical measures on the S&P 500 weakened further after the benchmark index's 50-day moving average broke below its 200-day moving average, indicating more pressure on the downside.

This "death cross" — a shorter-term average falling below a longer-term average — last occurred between the 50- and 200-day moving averages in December 2007, soon after the market began a decline that eventually took the S&P 500 to 12-year lows in March 2009.

"I don't necessarily think that that by itself is a signal that we're headed further lower," Michael James, senior trader at Wedbush Morgan in Los Angeles, told Reuters.

"I think it's a function of increasingly negative sentiment leading to somewhat relentless selling over the last two weeks," he said.

Allergan [AGN Loading... ()] and Biogen [BIIB Loading... ()] rose after analysts cited them as possible targets following a Bloomberg report that Sanofi-Aventis was preparing an acquisition of $20 billion or more in the US.

On the M&A front, French drugmaker Sanofi-Aventis is preparing an acquisition in the U.S. that may be worth $20 billion or more, Bloomberg reported on Thursday. A Sanofi-Aventis spokesman declined to comment.

And British power supply systems maker Chloride [CHLD-LN Loading... ()] has recommended a $1.5 billion takeover by U.S. conglomerate Emerson Electric [EMR Loading... () ], bringing to an end a long-running bid battle.

Lions Gate Entertainment [LGF Loading... () ] said late on Thursday that it has adopted a shareholder rights plan, in a move to deter billionaire Carl Icahn's hostile attempt to buy the independent Hollywood studio.