Stocks slip on slow hir­ing

All 61 health care com­pa­nies on S&P 500 fall; re­tail­ers also go down

The Denver Post - - BUSINESS - By Mar­ley Jay

U.S. stocks took their big­gest loss in more than six weeks Thurs­day as in­vestors re­acted to mount­ing ev­i­dence that hir­ing has slowed down. En­ergy and health care com­pa­nies fell sharply, and so did re­tail­ers.

Stocks slumped after ADP, a pay­roll pro­cess­ing com­pany, said pri­vate busi­nesses added fewer jobs in June than in­vestors had ex­pected.

Bond prices fell and yields jumped, which hurt com­pa­nies that pay large div­i­dends, such as ma­jor drug com­pa­nies and real es­tate in­vest­ment trusts. Re­tail­ers sank after L Brands, the par­ent com­pany of Vic­to­ria’s Se­cret, re­ported weak sales in June.

The ADP sur­vey was the lat­est piece of ev­i­dence that hir­ing has slowed down in re­cent months. That has in­vestors wor­ried, be­cause the Euro­pean Cen­tral Bank may start rais­ing rates soon and rates are al­ready ris­ing in the U.S. Higher in­ter­est rates tend to slow down eco­nomic growth.

“If rates rise mean­ing­fully, it will end up ham­per­ing growth ex­pec­ta­tions,” said Kr­ishna Me­mani, chief in­vest­ment of­fi­cer at Op­pen­heimer Fund.

The Stan­dard & Poor’s 500 in­dex dropped 22.79 points, or 0.9 per­cent, to 2,409.75. The Dow Jones in­dus­trial av­er­age fell 158.13 points, or 0.7 per­cent, to 21,320.04. The Nas­daq com­pos­ite sank 61.39 points, or 1 per­cent, to 6,089.46. The Rus­sell 2000 in­dex, which is com­prised of smaller, more U.S.-fo­cused com­pa­nies, shed 19.33 points, or 1.4 per­cent, to 1,400.81.

ADP’s sur­vey showed that pri­vate U.S. busi­nesses added 158,000 jobs in June, and the firm low­ered its es­ti­mates for job growth in April and May. The un­em­ploy­ment rate is at 40-year lows, but there isn’t much ev­i­dence that wage gains and eco­nomic growth are speed­ing up.

“We were ex­pect­ing a sig­nif­i­cantly higher growth rate in the se­cond quar­ter,” said Me­mani. “It’s not pan­ning out that way.”

All of the 61 health care com­pa­nies listed on the S&P 500 lost ground. Biotech drug­maker Am­gen de­clined $2.54, or 1.5 per­cent, to $171.72 and med­i­cal de­vice maker Medtronic lost $1.64, or 1.8 per­cent, to $87.26.

Drug­maker Merck skid­ded $1.06, or 1.7 per­cent, to $63.10 after it stopped two stud­ies of its can­cer drug Keytruda as a treat­ment for mul­ti­ple myeloma. Merck said more pa­tients who were treated with Keytruda died.

The par­ent com­pany of QVC will buy the rest of Home Shop­ping Net­work that it didn’t al­ready own for about $2.6 bil­lion in stock. Lib­erty In­ter­ac­tive said it will value QVC at $40.36 a share in the deal. It al­ready owns a 38 per­cent stake in HSN, which jumped $8.40, or 26.8 per­cent, to $39.70. Lib­erty In­ter­ac­tive fell 30 cents, or 1.2 per­cent, to $24.16.

En­ergy com­pa­nies faded even though fuel prices in­creased. Bench­mark U.S. crude oil rose 39 cents to $45.52 a bar­rel in New York. Brent crude, used to price in­ter­na­tional oils, added 32 cents to $48.11 a bar­rel in Lon­don.

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