Bears Seize the Day as Data Weigh on Markets

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Stocks closed in the red, coming back from steeper losses, after disappointing data on employment and the services sector spooked the markets. 

Today's Markets

The Dow Jones Industrial Average lost 83.9 points, or 0.66%, to 12,724, the S&P 500 was down 9.3 points, or 0.69%, to 1,347 and the Nasdaq Composite traded lower by 13.4 points, or 0.47%, to 2,828. The FOX 50 was lower by 4.1 points to 951.  

The Dow had been down as much as 132 points before staging a late-day comeback. 

Companies that make industrial goods like Caterpillar (CAT) and Deere (DE) struggled the most on the day on concerns an a slowdown in economic recovery would cut their bottom lines. The healthcare sector was one of the few to gain on the day, with firms like Pfizer (PFE) and Novartis (NOV) pushing higher. 

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The Institute for Supply Management said its gauge of activity in the non-manufacturing sector slid to 52.8 in April from 57.3 the prior month, far lower than estimates of 57.4.  Readings above the 50 mark point to expansion. 

The report notes that companies are concerned over rising costs but "most respondents remain confident about the direction of the economy." 

The labor market is expected to take centerstage toward the end of this week as traders await the release of the important monthly jobs report on Friday.  

The jobs market was hit hard by the economic downturn, with the national unemployment rate peaking at 10.1% in October 2009.  As the economy has recovered, the employment situation has improved moderately, with the unemployment rate falling to 8.8%. 

As energy prices soar, "it is ever more important that the US economy generates jobs," wrote Peter Bookvar, managing director at Miller Tabak+ Co., in a note. 

The private sector added 179,000 jobs in April, lower than economists' expectations for a gain of 198,000, according to payroll firm ADP.

Planned job cuts fell 12% to a 2011-low of 36,490 in April, from 41,528 the prior month, according to Challenger, Gray & Christmas.  

On the corporate front, Sony (SNE) blamed a well-known hacker group called Anonymous for indirectly allowing hackers to steal data from millions of customers, prompting a probe by the Justice Department. 

Mergers and acquisitions activity has heated recently. 

Applied Materials (AMAT) unveiled a deal to snap up Varian Semiconductor (VSEA) for $4.9 billion in cash as it looks to boost its smartphone and solar business. Applied Materials manufactures the equipment that makes the parts for these technologies, and the Varian buy will expand its capabilities in those sectors.

Conagra Foods (CAG) made an offer to acquire Ralcorp Holdings (RAH) for roughly $4.9 billion. However, Ralcorp's board quickly retorted, unanimously rejecting the bid. 

Kellogg's (K) quarterly profit fell to $366 million, or $1 a share, compared with $418 million, or $1.09 per share, a year earlier. 

Intel (INTC) unveiled new power-efficient 22 nanometer chips that take leverage 3-dimensional microprocessors in hopes of bolstering it's core PC market and boosting its stance in the smartphone realm where power use is of critical importance.  

Oil inventories jumped 3.4 million barrels last week, far more than the expected build of 2 million barrels. However, gasoline stocks were off 1.1 million barrels compared with analysts' expectations of a build of 300,000 barrels. Interestingly, demand for gasoline is down 1.9% on a year-over-year basis, possibly pointing to demand destruction due to high prices. 

Light, sweet crude fell $1.81, or 1.6%, to $109.24.  Wholesale RBOB gas was off a penny, or 0.21%, to $3.32 a gallon.

Gasoline on the consumer level has already surpassed $4 a gallon in many states.  A gallon of regular gas cost $3.98 on average nationwide, up from $3.66 last month and $2.90 last year, according to the AAA Fuel Gauge Report. 

In the foreign exchange market, the dollar was off 0.02% against a basket of world currencies and the euro gained 0.05% against the greenback. 

Gold was down $25.10, or 1.6%, to $1,515 a troy ounce. 

Corporate News

AOL (AOL) posted earnings of 22 cents a share, topping estimates of 19 cents, on growing advertising revenue. 

Time Warner (TWX) beat expectations as well, positing adjusted earnings of 58 cents a share, two cents Wall Street's view. 

Renren (RENN) -- a Chinese social networking Web site -- soared more than 40% in its initial public offering.  

Las Vegas Sands' (LVS) first-quarter profit jumped to $289 million , but came in well below analysts' expectations, sending shares far lower. 

Glencore priced its initial public offering between 480 and 580 pence, which values the global commodities and mining company at roughly $61 billion. 

Chipotle Mexican Grill (CMG) is under federal investigation amid questions about the popular chains' employment practices. 

Foreign Markets 

The English FTSE 100 was down 1.6% to 5,984, the French CAC 40 slipped 1.3% to 4,043 and the German DAX slid 1.7% to 7,374. 

In Asia, Chinese Hang Seng plummeted 1.4% to 23,315 and the Tokyo Stock Exchange was closed for the Greenery day holiday. 

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