Stocks finish dismal Q2 on sour note as jobs data disappoints

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By Hao Li | July 1, 2010 11:36 AM EST

The stock market ended the second quarter in a disappointing mood as Automatic Data Processing's (ADP) jobs data fell sharply below expectations, possibly sparking concerns ahead of Friday's more closely-watched jobs data.

U.S, equities suffered a particularly dismal second quarter -- the S&P 500 and Nasdaq each plunged 12 percent for the period, while the Dow Jones Industrial Average tumbled 10 percent -- making it the worst quarter since the collapse of Lehmsan Brothers in late 2008.

The S&P 500 dropped 10.53 points, or 1.01 percent, to close at 1,030.61. The Dow Jones Industrial Average dropped 96.28 points, or 0.98 percent, to end at 9,774.02. The Nasdaq Composite lost 1.21 percent. Like many trading sessions recently, today featured yet another late-day sell-off.

 The S&P 500 Index also closed below 1,040, which some technical analysts consider a key support level and warn that if it is breached, the market could decline further.

 

Basic materials and technology stocks dropped the most as Freeport-McMoran (NYSE:FCX) fell 3.18 percent and Google (NASDAQ:GOOG) lost 2.05 percent.

 

European markets recovered from Tuesday's sell-off as Germany's DAX closed up 0.23 percent and France's CAC 40 gained 0.29 percent. Asian stocks were lower as Hong Kong's Hang Seng lost 0.59 percent.

 

The euro rose against the U.S. dollar, although it was trading higher around the end of the European session, which corresponds to noon in New York.

 

European assets fared relatively well as concerns from the expiry of European Central Bank's (ECB) 1-year loans to banks eased. On Wednesday, the ECB opened a lending facility offering 3-month loans – for the purpose of smoothing over the expiring of 1-year loans – and the demand for these loans were less than expected, suggesting that liquidity in Europe is better than previously thought.

 

A U.S. economic report showed that manufacturing activities in the Chicago region remains strong. However, investors were spooked by a worse than expected ADP private non-farm payrolls change. While economists surveyed by Bloomberg expected a gain of 60,000, the actual increase was only 13,000.

 

This unnerved some investors ahead of Friday's closely-watched and market-moving Bureau of Labor Statistics (BLS) jobs report, which contains the government's non-farm payrolls change and unemployment rate figure.

 

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