Wall Street retreated marginally in early trading today as reports showed US job-cutting exceeding economist forecasts.

News coming out of the US today is all to do with job-cutting figures reported by ADP and Challenger, Gray and Christmas. ADP reported that monthly job cuts in July exceeded Bloomberg’s economist forecasts – 371,000 instead of the predicted 350,000 [1] – but were still better than the figure of 463,000 reported by ADP the month before.

The Challenger report, meanwhile, has revealed that planned firings in July 2009 rose 31% from 74,393 in June 2009, but were still down 5.7% from the figure of 97,373 recorded in July 2008. This marks the first time since late 2007 that consecutive monthly drops have been returned by the Challenger job-cut report. Previously the report had revealed that job cuts in June 2009 had come in at 74,393, down 9% from the figure of 81,755 recorded in June 2008.

‘While there are signs that the economy is stabilising and the pace of layoffs slowing, we are still a long way from a full recovery,’ commented John A Challenger, executive officer of the placement company. [2] Mr Challenger’s sentiments were reflected in the first fall in five days for US stocks, with both the S&P 500 and the Dow Jones Industrial Average retreating from their respective highs.

By 3.30pm (London time) the Dow Jones Industrial Average was down 100.89 points (-1.08 %) to 9219, and the S&P 500 was down 0.88% at 996.83. Top of the winners column on the Dow was Bank of America Corp, up 3.52% to $16.19, followed by JP Morgan Chase and Microsoft, up 2.04% to $41.03 and 0.93% to $23.99 respectively.

At the other end of the table, Proctor & Gamble was down 3.8% to $53.36 at 3.30pm (London time) as the household-products manufacturer recorded a $2.47 billion drop in net income for the fourth quarter. The company put the drop down to a decline in consumer spending on high-end skin care and detergent products, as consumers look for ways to reduce the cost of their shopping basket. Walt Disney Co was down 2.26% to $25.05 and Kraft Foods was 0.78% lower at $28.12.

[1] Source: Bloomberg News (5 August 2009)
[2] Source: Bloomberg News (5 August 2009)

By Anthony Grech, Research Analyst, IG Index.

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