The Nasdaq and S&P 500 finished with losses while the Dow ended flat
U.S. stocks ended Wednesday's choppy session mostly lower on Wednesday, 05 February 2014 as investors were unable to shrug off worries over the economy. Equities ended the Wednesday session on a mixed note in fact. The Nasdaq and S&P 500 finished with losses while the Dow Jones Industrial Average ended flat. A weaker-than-expected ADP jobs report and the ISM report on the services side of the economy compounded fears that the U.S. recovery is still vulnerable, weighing on sentiment.
The Dow Jones Industrial Average which dropped more than 100 points at session lows, closed 5 points lower at 15,440.29. The Nasdaq Composite ended the day 19.97 points, or 0.5%, lower at 4,011.55. The S&P 500 closed down 3.56 points, or 0.2% at 1,751.64. and is 5.2% below its peak reached on Jan 15.
The ADP national employment report was released Wednesday morning and showed a rise of 175,000 jobs in January. The consensus forecast was for a rise of 189,000 jobs in the ADP report.
While traders and investors are still concerned about the situation regarding some emerging market currencies being in turmoil, most of those troubled smaller currencies have stabilized this week. This helped the Japanese stock market make a recovery Wednesday. The Chinese Lunar New Year holiday has China on holiday this week. That is keeping other Asian markets somewhat subdued.
In overnight news, the European Union issued a retail sales report for December that was down 1.6% on the month and down 1.0% on the year. The Euro Zone purchasing managers index (PMI) for January came in at 52.9 in January versus 52.1 in December. This data comes just ahead of the monthly meeting on monetary policy by the European Central Bank on Thursday.
Today's other economic data included the weekly MBA Mortgage Index which ticked up 0.4% to follow last week's 0.2% decline. Also, the ISM Non-manufacturing Index for January increased to 54.0 from 53.0. The consensus expected the index to increase to 53.8. Weather conditions, which were blamed for the poor manufacturing report, seemed to have no impact on services sector. Business Activities accelerated in January. The index increased to 56.3 from 54.3.
The recent spate of disappointing U.S. economic data has put even more importance on Friday's monthly U.S. jobs report for January. A weaker-than-expected jobs report on Friday would call into question how much more the Fed would be able reduce its monthly bond-buying program, also called quantitative easing. Late last year the U.S. central bank announced its tapering program, whereby the Fed is slowly scaling back its monthly bond purchases. The early forecasts are for the non-farm payrolls figure of the Labor Department's employment report to come in at up around 190,000 in January.
Bullion prices ended higher on Wednesday, 05 February 2014. Gold futures settled higher on Wednesday, finding support as U.S. equities traded mostly lower following a weaker-than-expected report on private-sector employment. Still, some upbeat economic data caused gold to briefly pare some of its earlier gains and prices for silver, an industrial metal, to move up.
Gold for April delivery rose $5.70, or 0.5%, to settle at $1,256.90 an ounce on the Comex division of the New York Mercantile Exchange. March silver added 38 cents, or 2%, to $19.805 an ounce.
Crude prices had held on to modest gains at Nymex on Wednesday, 05 February 2014 after payroll-management firm Automatic Data Processing estimated private-sector employers added a smaller-than-expected 175,000 jobs in January. Prices also finished with a modest gain after a U.S. government report showed that last week's crude supplies rose less than the market expected.
March crude oil gained 19 cents, or 0.2%, to settle at $97.38 a barrel on the New York Mercantile Exchange after earlier topping $98. It was trading at around $97.91 shortly before the EIA data were released.
Following the economic data, the U.S. Energy Information Administration said crude stockpiles rose 400,000 barrels for the week ended 31 January 2014. Market was looking for a climb of 1.5 million barrels. EIA also showed that gasoline supplies rose by 500,000 barrels less than the 1.5 million-barrel climb expected. Distillate stockpiles fell 2.4 million barrels, a bit more than the expected decline of 2 million barrels.
Tomorrow, Challenger Job Cuts for January will be announced at 7:30 ET while weekly initial claims, December trade deficit, and fourth quarter productivity data will be released at 8:30 ET.
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