Stocks Start on the Downside

Stocks start on the downside

Non-farm payrolls fall – biggest drop
since Nov. 1991

NEW YORK (CBS.MW) – An incredibly weak employment report Friday was a
rude awakening for investors, who sent the major indexes sharply lower
and were especially aggressive in selling tech stocks.

A fall in non-farm payrolls – the largest decline since the recession
in 1991 – roiled stocks, suggesting that the economic recovery many are
hoping for later in the year may not materialize quite as quickly.

Checking the numbers, non-farm payrolls fell 86,000 in March compared
to expectations for a 67,000 gain while the unemployment rate, as had
been expected, edged up to 4.3 percent from February’s 4.2 percent. The
jobless rate is now at its highest level since the summer of 1999.
Further, average hourly earnings rose 0.4 percent, more than the
expected 0.3 percent increase. and view Economic Preview and economic
calendar and forecasts.

Thursday’s scintillating rally already appears a distant memory as
investors appear unwilling to shrug off bad news and are instead
focusing on another round of profit warnings, including lowered views
from tech concerns Tellabs and Sycamore Networks.

The Dow Jones Industrial Average ($DJ) gave up 159 points, or 1.6
percent, to 9,759.

The Nasdaq Composite ($COMPQ) dropped 54 points, or 3.0 percent, to
1,731 while the Nasdaq 100 Index ($NDX) gave up 59 points, or 3.9
percent, to 1,459.

"In the next few weeks, we will likely see a mixed bag of
earnings results at best. We think the leading stocks in a narrow
recovery will be dominated by recession-resistant stocks in the
consumer-related businesses, oil and gas, and independent power
producers," commented," Louis Navellier of the Navellier
Performance Funds.

The Standard & Poor’s 500 Index ($SPX) fell 1.7 percent while the
Russell 2000 Index ($RUT) of small-capitalization stocks dropped 1.2
percent.

Volume came in at 50 million on the NYSE and at 100 million on the
Nasdaq Stock Market. Market breadth was negative, with decliners
outpacing advancers by 14 to 5 on the NYSE and by 17 to 13 on the Nasdaq.

Elsewhere, Trim Tabs estimated that all equity funds saw outflows of
$14.8 billion over the week ended April 4, compared with outflows of
$1.4 billion during the previous week. And equity funds that invest
primarily in U.S. stocks had outflows of $11.1 billion, compared with
outflows of $3.5 billion the prior week.

Specific movers

Fiber-optic outfit Sycamore (SCMR) shaved 24.7 percent. The company
informed investors after the close Thursday that it now expects a
third-quarter loss of 16 to 19 cents a share compared to the expected
profit of 5 cents a share, per First Call/Thomson Financial.

Tellabs (TLAB), meanwhile, lowered earnings and revenue estimates for
the first quarter due to reduced and deferred spending by major
communications carriers late in the quarter. The optical networking
outfit now expects earnings-per-share of 29 cents compared to previous
guidance of 35 to 38 cents. First Call/Thomson Financial expected EPS of
36 cents for the first quarter. The stock tumbled 12.7 percent.

Treasury focus

Treasury prices — already higher ahead of the employment report news
— continued to build on gains following the weaker-than-expected
report.

The 10-year Treasury note climbed 13/32 to yield ($TNX) 4.925 percent
while the 30-year government bond jumped 14/32 to yield ($TYX) 5.50
percent.

In the currency arena, dollar/yen gained 0.2 percent to 124.18 while
euro/dollar edged up 0.3 percent to 0.8994.