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Stocks dip as investors enter week cautiously

Mon, 08/30/2010 - 6:35am
STEPHEN BERNARD - AP Business Writer - Associated Press

Stocks edged lower Monday as investors took a cautious approach to trading before the government's latest report on the jobs market.

The Dow Jones industrial average fell 22 points in morning trading. Broader indexes also edged lower.

Several stocks were moving on the latest flurry of corporate news. Genzyme Corp. rose after rejecting Sanofi-Aventis SA's $18.5 billion takeover offer, while Hewlett-Packard Co. rose after saying it plans to buy back stock. Cogent Inc. jumped after agreeing to be acquired by 3M Co.

Investors have been homing in on employment data as a key way of predicting where the economy is going. Signs of a slowdown in growth has plagued the market for more than a month. Investors are unsure if companies will be able to keep up strong earnings growth if the recovery runs out of steam or falls back into recession. And consumers aren't likely to spend more until there are clear and regular signs of hiring.

Traders largely shrugged of a new report showing that personal spending inched higher last month.

In morning trading, the Dow fell 21.57, or 0.2 percent, to 10,129.08. The Standard & Poor's 500 index fell 2.08, or 0.2 percent, to 1,062.51, while the Nasdaq composite index fell 3.52, or 0.2 percent, to 2,150.11.

About three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 72.1 million.

Biotechnology company Genzyme said Sanofi-Aventis' $69 per share offer undervalues the company. Genzyme shares jumped $2.73, or 4 percent, to $70.35, while Sanofi rose 10 cents to $29.02.

Hewlett-Packard said it plans to repurchase $10 billion in stock. The computer company plans to use buy back shares, in part, to offset dilution from employee stock plans. Hewlett-Packard shares rose $1.37, or 3.6 percent, to $39.37.

Stocks have largely been moving on major economic reports and less on individual corporate news during the past month. Because the Labor Department's monthly employment report doesn't come until Friday, investors will look for signs earlier in the week about the jobs market.

In economic news Monday, the Commerce Department said personal spending rose 0.4 percent in July, the biggest jump in four months. Economists polled by Thomson Reuters had forecast spending would rise 0.3 percent. Personal income rose 0.2 percent, just below what economists expected.

The Institute for Supply Management releases its monthly manufacturing survey Wednesday, which has an employment component to it. Payroll company ADP also releases its data on private jobs growth Wednesday.

The Labor Department releases its weekly report on unemployment claims Thursday. New claims fell last week, but remain at elevated levels. That indicate employers are not adding new workers, even if they aren't firing too many employees either.

Traders moved money into Treasurys, sending interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.60 percent from 2.65 percent late Friday. Its yield is often used to set interest rates on mortgages and other consumer loans.

Japanese markets surged overnight after the country's central bank approved new stimulus measures aimed at sparking growth and putting the brakes on a strengthening yen. The yen recently hit a 15-year high against the dollar, which hurts Japanese manufacturers, like Sony Corp., Panasonic Corp. and Toyota Motor Corp., that rely heavily on exports. Japan's Nikkei stock average rose 1.8 percent.

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