NY Points Lower on Weaker Jobs Data

Elena
05 Sep, 2007
New York City

U.S. stock futures reversed from the strong run yesterday, indicating a steep decline at opening on Wednesday amid disappointing employment data. According to the ADP employment report, employment in the U.S. private sector grew by 38,000 in August, the weakest in four years, suggesting that nonfarm payrolls may have grown much slower than the 123,000 expected by economists. The economic agenda also included the release of the Beige Book later in the session.

[R]09:00AM U.S. stock futures indicated a lower opening ahead of economic data.[/R]

U.S. stock futures reversed from the strong run yesterday, indicating a steep decline at opening on Wednesday amid disappointing employment data. Wall Street closed higher Tuesday, boosted by strong gains in the tech sector after favorable comments on Yahoo ((YHOO)), Advanced Micro Devices ((AMD)) and Intel ((INTC)). Yahoo is expected to attract attention after agreeing late Tuesday to buy online ad company BlueLithium for $300 million.

According to the ADP employment report posted early Wednesday, employment in the U.S. private sector grew by 38,000 in August, the weakest in four years, suggesting that nonfarm payrolls may have grown much slower than the 123,000 expected by economists. The economic agenda also included the release of the Beige Book later in the session.

Among companies in focus, Altria ((MO)) fell 1.3% in pre-market trading after the tobacco group was downgraded to neutral from buy at Goldman Sachs. Alcoa ((AA)) shares gained 1.5% in the pre-open after Merrill Lynch upgraded its stock. The broker also lifted its metal price forecast, while Morgan Stanley raised its oil-price view.

In deal-related news, Canadian Pacific Railway ((CP)) agreed to pay $1.48 billion to buy Dakota, Minnesota and Eastern Railroad. In other corporate news, private-mortgage insurer MGIC Investment ((MTG)) and rival Radian Group ((RDN)) announced that they terminated merger talks and abandoned plans to combine the two companies.

S&P 500 futures declined 11.2 points at 1,478.40 and Nasdaq 100 futures declined 9.25 points at 2,015.50. Dow industrial futures fell 71 points.


[R]8:30AM MGIC Investment and rival Radian Group decided to terminate merger talks.[/R]

Private-mortgage insurer MGIC Investment ((MTG)) and rival Radian Group ((RDN)) announced Wednesday that they terminated merger talks and abandoned plans to combine the two companies. Òhe reason they brought to the fore was troubles in the mortgage industry.

The companies announced an acquisition deal on Feb. 6. According to the agreed terms, MGIC was expected to pay about $5 billion for Radian. However, its value notably decreased along with MGIC''s stock price.

MGIC said in August it no longer believed it had to complete the buyout of Radian because their joint interest in subprime mortgage investor C-Bass LLC could be worthless. The two firms announced their agreement to terminate the pending merger, as keeping their independence would be in their favor. Neither company paid each other to get out of the agreement.