Stock futures mixed after weak jobs report

June 30, 2010 6:23:10 AM PDT
Stock futures gave up most of their early morning gains Wednesday and were trading in a narrow range after another disappointing report on the jobs sector.

Payroll company ADP said private employers added just 13,000 jobs in June. That's well short of the 60,000 economists polled by Thomson Reuters forecast.

Futures had been higher following signs European banks have not relied on the European Central Bank as heavily for refinancing loans as had been forecast.

The ADP report is often seen as a precursor to the Labor Department's big monthly jobs report due out Friday. ADP's data only includes jobs created by private companies so it can vary widely from the Labor Department data, which also includes government jobs.

In fact, Friday's report is expected to show employers cut a total of 110,000 jobs in June. However, economists predict the net loss of jobs is tied primarily to the government laying off temporary workers that were hired to work on the 2010 census.

But with the weak report from ADP, there could now be major questions about how many jobs the government will say were added by private employers this month.

Companies have been slow to add new jobs coming out of the recession, which has hurt the pace of a recovery. Consumer confidence has fallen and spending has not picked up as investors had hoped because there are so many people still out of work. Consumer spending is the primary driver of economic activity in the country.

Ahead of the opening bell, Dow Jones industrial average futures rose 10, or 0.1 percent, to 9,807. Standard & Poor's 500 index futures rose 0.90, or 0.1 percent, to 1,036.20, while Nasdaq 100 index futures rose 2.00, or 0.1 percent, to 1,765.50.

The weak jobs report falls into a trend that was seen throughout the quarter and helped lead to a brutal quarter for the market. Heading into the final day of the quarter, the Dow is down 9.1 percent during that stretch.

Investors have been routinely disappointed by economic data throughout the month that showed the economy's recovery is slow and choppy.

Added fears in Europe that mounting deficits in countries like Greece, Spain and Portugal would upend a recovery on that continent and further slow a rebound worldwide have also pummeled stocks throughout the quarter.

The euro, used by 16 European Union members, has become a proxy for confidence in the continent's economic recovery. It was dropped about 9 percent during the second quarter, but was up slightly Wednesday at $1.2260.

European markets received a boost Wednesday after the European Central Bank said European banks did not borrow as much through a three-month refinancing program as expected. However, even those gains moderated after the disappointing U.S. jobs report.

Britain's FTSE 100 rose 0.4 percent, Germany's DAX index gained 0.3 percent, and France's CAC-40 fell 0.2 percent.

As investors pulled out of stocks and fled the euro throughout the quarter, U.S. Treasurys and gold were big beneficiaries. The perceived safety of the two helped push bond and gold prices higher.

The yield on the 10-year Treasury note, which moves opposite its price, fell below 3 percent for the first time in more than a year on Tuesday, falling to 2.95 percent. It barely budged off that low Wednesday morning, rising to 2.96 percent.

Gold dipped $2.70 to $1,239.70 an ounce, but is up nearly 12 percent for the quarter.