U.S. Stock Futures Decline on Tepid Payrolls Growth
07/06/2012| 09:10am US/Eastern
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By Jonathan Cheng and Tomi Kilgore
U.S. stock futures fell after domestic jobs grew by just 80,000 in June, falling short of expectations and suggesting further weakness in the economy.
Less than an hour ahead of the open, Dow Jones Industrial Average futures lost 70 points, or 0.6%, to 12762. Standard & Poor's 500-stock index futures gave up nine points, or 0.7%, to 1352 and Nasdaq 100 futures eased 14 points, or 0.5%, to 2629.
Prior to the jobs report data, Dow futures had slipped 14 points, S&P 500 futures had given up three points and Nasdaq futures edged down three points. Changes in stock futures do not always accurately predict stock moves after the opening bell.
The Labor Department's monthly employment report, still the most important data point of the month, showed nonfarm payroll growth improved by just 80,000 in June from an upwardly revised reading of 77,000 in May.
The poor reading comes on the heels of similarly disappointing reports on the U.S. manufacturing and services sectors, and caught some economists off-step. On Thursday, many of them had nudged their predictions for Friday's report modestly higher, following a surprisingly strong report on private-sector payrolls.
On Friday, the unemployment rate stood pat at 8.2%, in line with expectations.
Immediately following the report, crude oil futures extended its slide to fall 2.8%, trading at $84.82 a barrel. Gold futures pared losses to slip 0.4% at just above $1,600 an ounce. The U.S. dollar added more gains against the euro, which traded at $1.2352, but slipped against the yen. The yield on the benchmark 10-year Treasury yield declined to 1.56%.
The U.S. jobs report pushed already weak European stock markets even lower, coming on the heels of further weakness in Spain and Italy. The Stoxx Europe 600 gave up 0.6%, trading at the lows for the day.
In addition, International Monetary Fund head Christine Lagarde said the IMF's forecast on global economic growth will be cut next month, and expressed concern about the euro zone's continuing debt crisis.
Spain's IBEX-35 index slid 2%, after slumping 3% in the previous session, with the yield on benchmark 10-year Spanish bonds rising to just under 7%. That's the highest level seen since before the European Union summit at the end of last week.
Italy's FTSE MIB was down 1.3%, adding to Thursday's 2% slide, after the government approved EUR4.5 billion in spending cuts for 2012 in an effort to shore up the country's finances.
On the bright side, German industrial output jumped 1.6% in May, above expectations of a 0.4% increase.
Asian markets were mostly lower on concerns over slowing economic growth, although China's Shanghai Composite rallied 1% after the country's central bank lowered interest rates after Thursday's close. Japan's Nikkei Stock Average lost 0.7% and Australia's S&P ASX 200 gave up 0.3%.
In corporate news, shares of Informatica tumbled 27% after the data integration software company provided a second-quarter earnings and revenue outlook that was below analyst forecasts. The company also said it was adding $100 million to its stock buyback program.
Seagate Technology dropped 2.9% after the hard disk drive company provided an fiscal fourth-quarter revenue outlook that was below analyst projections, citing disappointing market share growth and a supplier quality issue.
Xyratex rose 6.7% after the data storage technology company reported second-quarter earnings that exceeded expectations, and provided an upbeat earnings outlook for the third quarter.
Japan's ABC-MART said it agreed to buy LaCrosse Footwear for about $138 million. The $20-per-share bid represents an 82% premium to Thursday's closing price. LaCrosse shares surged 81% ahead of the open.
Write to Jonathan Cheng at jonathan.cheng@dowjones.com
Write to Tomi Kilgore at tomi.kilgore@dowjones.com
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