More reminders of a weak job market are chilling the stock market's rally.
Stocks are narrowly mixed in early trading Wednesday after a private-sector report on unemployment offered little encouragement ahead of Friday's crucial jobs data from the Labor Department. The ADP National Employment Report, a closely watched precursor to the government's report, said that employment fell by 371,000 in July — slightly more than anticipated — versus a revised decline of 463,000 jobs in June.
Meanwhile, an earnings report from Procter & Gamble Co. provided further evidence that Americans continue to feel the strain of a weak economy. The maker of such consumer products as Pampers diapers and Tide detergent said its fourth quarter profit fell 18 percent as consumers curbed their spending. The results narrowly beat expectations.
The financial health of Americans is crucial to lifting the economy out of
recession, as consumer spending accounts for about 70 percent of all U.S. economic activity. That's why unemployment has been such a concern for the market. Higher job losses mean more consumers are left with less to spend.
The caution in the market follows muted gains on Tuesday, when investors put the brakes on a huge advance that sent stocks up 14 percent in just 16 days.
Though recent earnings and economic news has improved, investors are wary of taking the market too high too quickly and analysts have been expecting stocks to drift after such a big move.
"Clearly the trend of economic data in recent weeks is positive, but we could see a little bit of profit taking over the next few days based on the fact that it is going to take some time before the jobs market really starts to improve," said Michael Sheldon, chief market strategist at RDM Financial.
In the first half hour of trading, the Dow Jones industrial average is down 15.71, or 0.2 percent, to 9,304.48. The Standard & Poor's 500 index is down less than a point to 1,005.28, while the Nasdaq composite index is up 1.30, or 0.1 percent, to 2,012.61.
m Procter & Gamble Co. provided further evidence that Americans continue to feel the strain of a weak economy. The maker of such consumer products as Pampers diapers and Tide detergent said its fourth quarter profit fell 18 percent as consumers reined in their spending. The results narrowly beat expectations.
The financial health of Americans is crucial to lifting the economy out of
recession, as consumer spending accounts for about 70 percent of all U.S. economic activity. That's why unemployment has been such a concern for the market. Higher job losses mean more consumers are left with less to spend.
The caution in the market follows muted gains on Tuesday, when investors put the brakes on a huge advance that sent stocks up 14 percent in just 16 days.
Though the earnings and economic news continues to be fairly upbeat, investors are wary of taking the market too high too quickly and analysts have been expecting stocks to drift after such a big move.
Ahead of the market's open, Dow Jones industrial average futures are down 31, or 0.3 percent, to 9,256. Standard & Poor's 500 index futures are down 2.70, or 0.3 percent, to 1,002, while Nasdaq 100 index futures are down 3, or 0.2 percent, to 1,627.25.
Investors are also awaiting reports on factory orders and activity in the services sector on Wednesday for more clues on the state of the economy. An earnings report from Cisco Systems Inc., to be issued after the market closes, will also be closely watched. Traders consider the world's largest maker of computer networking gear a gauge of the health of the technology sector.
Overseas markets have been mixed. European indexes posted modest gains after earlier losses in Asia. Bailed-out British bank Lloyds Banking Group PLC said most of its bad loans have been accounted for even as it reported a staggering $5.3 billion loss for the first half of the year.
In afternoon trading, Britain's FTSE 100 added 0.4 percent, Germany's DAX index was up 0.3 percent, and France's CAC-40 rose 0.7 percent.
Earlier Wednesday, Japan's Nikkei stock average closed down 1.2 percent and Hong Kong's Hang Seng index fell 1.5 percent.
Prices for commodities like oil and gold held steady, while the U.S. dollar was narrowly mixed against other major currencies.
Light, sweet crude fell 9 cents to $71.33 a barrel in electronic trading on the New York Mercantile Exchange.
Though consumers continue to feel the strain of a weak economy, there have been recent signs of improvement in manufacturing and housing, other crucial areas of the economy. The market's rally this summer has been fueled in large part by reports showing consecutive increases in home sales and a stabilization in prices. A report earlier this week signaled that the U.S. manufacturing industry could see growth next month.
Those reports come on top of better-than-expected corporate earnings, as companies make deep cost cuts to offset sagging revenue.
The benchmark Standard & Poor's 500 index, which moved above the 1,000 level for the first time since November on Monday, is up 48.6 percent off of 12-year lows hit in early March, but is still down 35.7 percent from its peak in October of 2007.
Bond prices fell in early trading. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.75 percent from 3.69 percent late Tuesday.
