Stocks trading in tight range following bad reports
NEW YORK — Stocks traded in a tight range today after the government’s jobs report met traders’ bleak expectations.
The Dow Jones industrial average slipped about 5 points in morning trading. Broader indexes were also little changed.
The government’s report that private employers added 83,000 jobs last month was weaker than the gain of 112,000 analysts had forecast. But traders had been bracing for lackluster numbers so the market’s initial reaction was modest.
Reports on jobs in the past two days had also diminished expectations. Payroll company ADP said private employment was weaker than expected, while the government said initial claims for unemployment benefits rose unexpectedly last week.
Investors have focused on private employment in recent months because the overall jobs numbers have been skewed by the hiring of temporary census workers. Also, private workers account for the bulk of the country’s labor force.
The government cut 225,000 census jobs in June. Overall, 125,000 workers lost their jobs last month, worse than the 110,000 forecast by economists polled by Thomson Reuters.
Traders have been concerned in recent weeks that the economic recovery could be fading. High unemployment has kept consumers’ confidence low and hurt retail sales. Consumer spending is the biggest driver of the U.S. economy so a rebound in hiring is critical to a sustained recovery.
John Silvia, chief economist at Wells Fargo Securities, said that while the jobs report indicates the economy might not be robust, it is still improving. He noted hiring by businesses was small, but that it occurred in industries from manufacturing to health care.
“It says to me you have economic growth,” Silvia said. “It’s sustained.”
The unemployment rate did fall unexpectedly, dropping to 9.5 percent. Economists polled by Thomson Reuters had forecast it to rise to 9.8 percent. The unemployment rate is calculated from different statistics than the net job cuts, which is why the unemployment rate can fall even if more people lose jobs in a month.
The government also reported after the start of trading that factory orders fell in May for the first time in nine months. The 1.4 percent drop was the biggest since March 2009, when major stock indexes hit a 12-year low.
In midmorning trading, the Dow fell 5.18, or 0.1 percent, to 9,727.05. The Standard & Poor’s 500 index rose 0.90, or 0.1 percent, to 1,028.27, while the Nasdaq composite index fell 0.77, or less than 0.1 percent, to 2,100.59.
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