After a hopeful comeback, markets didn't have the oomph to climb back to even. The Dow Jones Industrial Average
A slew of negative global macro announcements pushed stocks lower early. Australian employers cut payrolls by 27,000 workers in June, while Bloomberg had projected no cuts. The Bank of Korea broke from precedent and lowered its key interest rate, showing its anxiety over global economic conditions. The Euro continued to fall, and reached a two-year low against the dollar. China will release its second quarter GDP data overnight. Analysts project the growth rate will be China's lowest since the 2008 crisis. Also, negative sentiment continued to surround markets following yesterday's Federal Reserve minutes, which indicated that the economy may have to get even worse before the Fed revs up its quantitative easing engine.
After hitting bottom around 11 am, the S&P started clawing its way back up, driven largely by a positive jobs report. First-time applications for jobless benefits dropped to 350,000 from 376,000 for the week ending July 7, the lowest number since March 2008. The better-than-expected figure shows that the labor market is gaining ground slowly but steadily. Moreover, unemployment claims generally skyrocket the first week of July, because auto companies and other manufacturers shut down their plants for renovations and updates. But more companies elected not to shut down plants to accommodate increased auto and manufacturing demand. The reported numbers are seasonally corrected without adjustments, and jobless claims rose 19% compared to expectations of 28%.
Market in Focus
Supermarket business Safeway was a big loser for the S&P 500, declining 12.5%, but its fall looks tiny compared to competitor Supervalu
While supermarkets had a rough go of it, a trio of pharmaceutical companies stole the spotlight. Procter & Gamble surged 3.75% on reports that Bill Ackman of Pershing Square Capital Management acquired a large position in the company. Not to be outdone, Merck rose 4.1% after announcing it will stop testing an experimental osteoporosis drug because it worked so well in trials. Merck shares rose to their highest value in four years. These gains made Pfizer, which gained 1.5% on the day, look like the tag along little brother.
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Foolish intern Charlie Kannel owns no shares of the companies mentioned above. The Motley Fool owns shares of Supervalu. Motley Fool newsletter services have recommended buying shares of Procter & Gamble and Pfizer. Motley Fool newsletter services have recommended buying calls on Supervalu. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.