U.S. Service Sector Weak; Stocks Struggle

123jump.com Staff
03 Feb, 2010
New York City

U.S. stocks declined after service industry expanded at a slower pace in January than estimated. Private sector cut 22,000 jobs according to a latest private survey. Crude oil inventories increased at the end of last week.

[R]12:00 PM New York – U.S. stocks declined after service industry expanded at a slower pace in January than estimated. Private sector cut 22,000 jobs according to a latest private survey. Crude oil inventories increased at the end of last week.[/R]

Stocks trended lower after the release of slower than expected expansion in the service sector and persistent worries of the jobs market. Investors fear that weak job market will crimp consumer spending hurting the economic recovery.

S&P 500 index in January declined 3.7% as China began tightening and the euro faced pressures as Greece, Spain, Portugal and Italy battle ballooning deficits.

The service sector index showed a mild expansion in January for the first time in three months.

The index increased to 50.5 from 49.8% in December and the read above 50 indicate the industry expansion. The measure of business activity in the sector that represent the business sentiment declined to 52.2 from 53.2 in December.

The latest survey of private companies released by the ADP showed a cut of 22,000 jobs in January. Another survey by the placement company Challenger, Gray & Christmas Inc showed planned layoffs in the month decreased to 71,482 from 241,749 a year ago.

Crude oil inventories at the end of last week increased 2.3 million barrels to 329.0 million barrels. Motor Gasoline inventories decreased 1.3 million barrels and that of finished gasoline increased and distillate decreased by 1.0 million barrels.

Earnings Review

JDS Uniphase Corporation, the maker of optical communications equipment and testing gear said second quarter revenues fell 3% to $342.9 million from $353.8 million a year ago. Net loss in the quarter was $19.5 million or 9 cents per diluted share compared to net loss of $722.9 million or $3.36 per share a year ago.

MetLife, Inc, the life insurance company said fourth quarter revenues fell 12% to $12.3 billion from $14.0 billion a year ago. Net income in the quarter fell 70% to $289 million or 35 cents per diluted share compared to net income of $954 million or $1.20 per share a year ago.

Mueller Water Products, Inc., a manufacturer of a range of water infrastructure said first quarter sales fell 15% to $313.1 million from $367.7 million a year ago. Net loss in the quarter was $10.7 million or 7 cents per diluted share compared to net loss of $400.0 million or $3.47 per share a year ago.

Tesoro Corporation, the petroleum refiner said fourth quarter sales rose 12% to $4.7 billion from $4.2 billion a year ago. Net loss in the quarter was $179 million or $1.30 per diluted share compared to net income of $97 million or 70 cents per share a year ago.

Net sales for the fiscal year 2009 fell 41% to $16.9 billion from $28.6 billion a year ago. Net loss for the year was $140 million or $1.01 per diluted share compared to net income of $278 million or $2.00 per share a year ago.