Stocks slip on slow hiring
All 61 health care companies on S&P 500 fall; retailers also go down
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.