US stocks pare losses as labor market worries persist

Earning reports check in better than expected

US stocks ended lower on the last day of the week that ended on Friday, 06 August 2010. Worse than expected non-farm payroll data took stocks substantially down earlier during the day. But stocks managed to pare their losses partly going in close mainly due to couple of positive earning announcements. A decline in consumer credit amid increased saving by American households also weighed on stocks during the day.



For the day, that ended on Friday, 06 August 2010, Dow ended lower by 21.42 points at 10,653.56. Nasdaq ended lower by 4.59 points at 2,288.47. S&P 500 ended lower by 4.17 points at 1,121.64. Dow was trading lower by 148 points earlier during the day.

Cyclical stocks declined, while defensive shares in health-care, utilities and consumer staples helped limit the damage.

Among economic data expected for the day, the Labor Department in US reported on Friday, 06 August 2010 that total nonfarm payrolls fell by a seasonally adjusted 131,000 in July 2010. The nation's unemployment rate held steady at 9.5%.

But all the lost jobs were temporary jobs at the U.S. Census. Private-sector payrolls rose by an estimated 71,000 in July. The increase in private payrolls was weaker than the 100,000 increase that had been expected by Wall Street. It showed that U.S. employers continued to hire but at a sluggish pace adding to pessimism about the economic outlook.

Also weighing Friday was a decline in consumer credit amid increased saving by American households. The Federal Reserve said in a report late Friday that consumer credit outstanding fell 0.7% in June, while the national savings rate rose to 6.4% from 6.3% in May,

Among the earning reports scheduled for the day, Dow components Kraft and former Dow member AIG were both among the latest to announce – both bested expectations for the bottom line. Kraft Foods gained 2.4% after reporting a 13% jump in its second-quarter profit as its new Cadbury business helped drive sales in developing markets in Asia and Latin America. Earnings topped Wall Street's expectations and Kraft affirmed its 2010 earnings outlook.

Crude oil prices ended lower for third straight day on Friday, 06 August 2010. Prices dropped in tandem with US stocks after non-farm payroll data disappointed traders today. On Friday, crude oil futures for light sweet crude for September delivery closed at $80.7/barrel (lower by $1.31 or 1.6%). For the week, crude ended higher by 2.2%.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.5%.

On Friday, natural gas posted another day of steep losses, down 2.9% to $4.47 per million British thermal units, the product's lowest close in three weeks. Natural gas lost 9.1% this week.

Bullion metal prices ended higher on Friday, 06 August 2010 at Comex. A weaker than expected non-farm payroll data increased the appeal of precious metals as an alternate investment. Prices also rose due to weak dollar. On Friday, gold for December delivery ended at $1,205.3 an ounce, higher by $6 (0.5%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $1,213.3. Prices rose for eight consecutive sessions. For the week, gold ended higher by 1.8%. September Comex silver futures ended higher by 15 cents (0.8%) at $18.47 an ounce. For the week, silver ended higher by 2.6%.

Volume was relatively weak, on Friday with 3.1 billion shares exchanging hands.

Almost all Indian ADRs ended lower on Friday. Tata Motors and Wipro Tech were the sole exceptions gaining 2.5% and 1.5% respectively. WNS and Patni Computers were the main losers shedding 1.1% each.