US Stocks Trade Near Lows as Tech Sector Sells Off
New York (Oct 1) Wall Street hovered close to session lows by mid-afternoon Thursday as high-momentum tech stocks led a broad selloff.
The S&P 500 was down 0.78%, the Dow Jones Industrial Average slid 1.1%, and the Nasdaq fell 1.1%.
Among the most-active losers in the tech sector, Apple (AAPL - Get Report) fell 2%, Google (GOOGL - Get Report) slid 0.7%, Microsoft (MSFT - Get Report) was down 0.7%, and Intel (INTC - Get Report) slipped 1.7%. The Technology SPDR ETF (XLK) fell more than 1.1%.
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Twitter (TWTR) shares stumbled 7% after spiking more than 5% on Wednesday. The social network had climbed on reports co-founder Jack Dorsey will assume the position of permanent CEO after acting as interim chief since June, according to Re/code. Former CEO Dick Costolo stepped down in early June.
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The latest check on the manufacturing sector showed activity teetering near contraction. Manufacturing activity in the U.S. fell to 50.2 in September from 50.6 in August, according to the ISM Manufacturing Index. The reading sits just above the 50-level that separates contraction from growth. Analysts expected the measure to remain unchanged.
"The decline in the ISM manufacturing index ... is yet another illustration of the devastating impact that the strong dollar and weak foreign demand is having on the battered factory sector," Steve Murphy, U.S. economist at Capital Economics, wrote in a note. "Things might well get even worse before they begin to get better."
Construction spending climbed 0.7% in August, maintaining the same level of growth as a month earlier. Economists had expected growth to slow to 0.5%.
Trading has been unpredictable this week ahead of the September jobs report. The release of the jobs data has taken on even more significance as Wall Street looks for signs U.S. economic strength is still intact after the Federal Reserve's decision to keep interest rates unchanged in September.
Economists expect 200,000 jobs to have been added to nonfarm payrolls in September, up from 173,000 in August. The unemployment rate is forecast to remain steady at 5.1%, while year-over-year growth in average hourly earnings is expected to climb to 2.4% from 2.2%.
"Such readings would not be enough to cause the Fed to become more introspective, but readings above those expected could complicate the debate," argued David Joy, chief market strategist at Ameriprise Financial, in a note.
Continuing unemployment claims hit a 15-year low of 2.191 million, down from 2.244 a week earlier, according to the Labor Department. The measure indicates that the labor market continues to tighten and that the monthly jobs number will meet healthy expectations.
The dip in continuing claims came even as the weekly measure of new filings for unemployment benefits increased. Weekly jobless claims, which tend to be a more volatile measure, rose by 10,000 to 277,000 in the week ended Sept. 26.
Stocks ended their worst quarter in four years on Wednesday. Wall Street had suffered heavy losses over the quarter after the threat of a Chinese slowdown began to materialize and confidence in the U.S. economic recovery was undermined by the Fed's trigger-shy approach to monetary policy.
General Motors (GM) spiked nearly 1% after unit sales jumped nearly 13% in September. Analysts had expected growth of no more than 7%. By brand, Chevrolet sales climbed 11%, Buick sales were up 5%, and Cadillac sales added nearly 8%.
Ford (F) sales climbed 23% over the month, just above analysts' estimates of a 22% increase. The double-digit increase was helped along by a later Labor Day holiday this year. Ford shares fell 0.3%.
Dunkin' Brands (DNKN) fell more than 10% after its full-year outlook fell short of analysts' estimates. The doughnut chain expects to earn between $1.87 and $1.91 a share over the full year, below estimates of $1.92, while revenue will likely grow no more than 8% compared to average expected growth of 7.9%. The company also expects to close 100 U.S. stores in 2015 and 2016.
ConAgra (CAG) will cut around 1,500 jobs and move its headquarters to Chicago from Omaha, Neb., as the company attempts to trim costs as part of a restructuring plan. The job cuts make up around 30% of its office workers. No plant positions will be cut.