Broad Decline in U.S. Indexes on Jobs Report and Weakening Euro

Nichole Harper
06 Mar, 2015
New York City

Market indexes on Wall Street dropped more than 1% after the latest jobs report fueled the sooner than expected increase in interest rate. In addition, the weakening euro also dampened the outlook for earnings growth at multinational companies.

[R]1:05 PM New York – Market indexes on Wall Street dropped more than 1% after the latest jobs report fueled the sooner than expected increase in interest rate. In addition, the weakening euro also dampened the outlook for earnings growth at multinational companies.[/R]

Market indexes traded sharply lower after the latest jobs report suggested healthier than expected employment market.

Traders speculated that the steady improvement in the jobs market may force the Fed to lift rates sooner than anticipated and the weakening euro may dampen the earnings growth among most of the companies in the S&P 500 index.

Trade deficit in January narrowed 8.3% to $41.8 billion from the revised $45.6 billion in December, the Department of Commerce said today.

For all of 2014, deficit increased to $505 billion, an increase of 6% from the 2013 deficit of $476.4 billion. The trade deficit totaled to the largest since 2012.

February non-farm payroll employment rose to 295,000 and the unemployment rate fell to 5.5% in the month from 5.7% in January, the Bureau of Labor Statistics announced.

However, wage growth slowed to 0.1% in February after rising at 0.5% in January. The slow wage growth indicated that the economy is still far from returning to its normal growth rate and millions of workers are still on the sidelines.

The labor force participation rate declined to 62.8% from 62.9% in January, a low last seen in 1978.

On Wall Street trading, Tollbooth Strategy Index slipped 0.6% or 62.02 to 10,681.02.

S&P 500 index declined 19.84 or 0.9% to 2,081.19 and the Nasdaq Composite Index dropped 34.79 or 0.7% to 4,947.98.

Crude oil fell 78 cents a barrel to $49.91 and gold fell $28.10 to $1,168.10 an ounce.

U.S. Movers

Big Lots, Inc ((BIG)) climbed 4% or $1.91 to $49.73 after the discount store operator reported net sales in the fourth-quarter ending in January increased 1.4% to $1.59 billion form a year ago period.

Net income in the quarter jumped 5.9% to $94.4 million or $1.77 per diluted share compared to $84.4 million or $1.45 from the same quarter last year.

Cooper Companies Inc ((COO)) surged 8.6% or $14.25 to $179.51 after the medical devices maker stated net sales in the first-quarter ending in January soared 10% to $445.2 million form a year ago period.

Net income in the quarter plunged 14.8% to $61.2 million or $1.25 per diluted share compared to $71.8 million or $1.47 from the same quarter last year.

The company lowered revenues forecast for the year to between $1.86 billion to $1.91 billion from the earlier estimate in the range between $1.90 billion to $1.96 billion

The company revised its adjusted earnings per share in the range of $7.40 to $7.70 from the previous guidance between $7.30 and $7.70.

Gap Inc ((GPS)) fell 37 cents to $41.06 after the specialty apparel retailer reported same-store sales in February dropped 4%. Net sales decreased 1.2% to $918 million from $929 million in a year ago month.

European Markets

In London trading, FTSE 100 index slipped 0.4% or 30.51 to 6,930.63 and in Frankfurt the DAX index gained 0.4% or 48.17 to 11,552.18.

In Paris, CAC 40 index rose 0.2% or 8.64 to 4,972.15.

Continental AG gained 0.6% to €71.47 after the Germany-based automobile parts maker reported sales in the year ending in December jumped 3.5% to €34.51 billion from €33.33 billion a year ago period.

Net profit in the year surged 23.5% from a year ago to €2.38 billion compared to €1.92 billion and earnings per share climbed to €11.88 from €9.62.

The company forecasted sales for the fiscal 2015 to climb 9% to €37.5 billion and EBIT margin is estimated to be 10.5%.

Thomas Cook Group surged 24.1% to 149.60 pence after the U.K.-based leisure travel group and China-based conglomerate Fosun International agreed to acquire 5% stake for £91.8 million or $140.12 million and plans to increase its stake to 10% in the company.

Wendel SA fell 0.4% to €110.90 after the France-based investment company agreed to reduce its stake by 10% in certification group Bureau Veritas at €20.32 per share or for €1 billion.

The company retains its stake of more than 40% and 56% of voting rights in Bureau Veritas.

Asian Markets

Market indexes in Japan extended gains for the second day and the yen eased after the ECB lifted inflation and growth estimates. For the week, the Nikkei index gained 0.9% and the yen traded above 120 mark.

Stocks in Tokyo closed higher for the second day in a row and the yen drifted lower near the low of the year.

Stocks extended gains after the European Central Bank President Mario Draghi laid announced monthly bond purchase plan.

Draghi also reaffirmed that the inflation target is within reach and lifted inflation and annual growth outlook till 2017.

The Nikkei 225 Stock Average climbed 219.16 or 1.2% to 18,971 and the broader Topix index jumped 17.12 or 1.1% to 1,540.84.

For the week, the Nikkei 225 index gained 0.9%. The yen eased and closed at 120.11 against one dollar.

Markets in India were closed to celebrate Holi festival.