Wall Street slumps; Dow closes day down 62 points

By Reuters

Stocks fell on Thursday as economic data sent mixed signals on the recovery a day before the critical April payrolls report.
Shares of Green Mountain Coffee Roasters Inc. plummeted, losing 49.4 percent to $25.05 a day after the company badly missed sales estimates for the second time in three quarters. The stock was by far the biggest decliner in the Nasdaq 100.  

Slower-than-expected growth in the huge services sector drove the day's trading. Another drag on the broad market came from the retail sector, with shares of several retailers, including Target  and Gap, falling after they missed April sales estimates. Cooler weather in April had curbed some of the enthusiasm that shoppers had shown earlier this year, a trend that raised concerns about consumer spending. 

A weak private-sector jobs report on Wednesday has lowered market expectations ahead of Friday's non-farm payrolls report. Traders now suspect the economy added 125,000 to 150,000 jobs in April, below a Reuters consensus forecast of 170,000. One trader said there had even been some talk of a number below 100,000. 

According to preliminary calculations, the Dow Jones industrial average fell 61.98 points, or 0.47 percent, to 13,206.59. The S&P 500 dropped 10.74 points, or 0.77 points, to 1,391.57. The Nasdaq sunk 35.55 points, or 1.16 percent, to 3,024.30.

Ryan Larson, head of equity trading at RBC Capital Management, said muted reactions to recent signs of economic weakness suggest some investors are counting on more monetary stimulus from the Federal Reserve if the data gets worse. 

"You are going back to 'bad numbers are good numbers'," he said, referring to the latest change in Wall Street's perception of discouraging data. "The market will believe that (Fed Chairman) Bernanke & Co will have to step in." 

With Thursday's decline, the S&P 500 has fallen close to its 50-day moving average of around 1,386.48. The benchmark index has retraced about 50 percent of its move off its closing low of 1,358.59 on April 10. 

The S&P 500 slipped in April, the first monthly drop since November, on softening domestic data, coupled with flare-ups in the euro zone's debt crisis. 

In Thursday's session, retail stocks fell after several large chains missed sales estimates in April. The results were a troubling sign for consumer spending.

Gap Inc fell 1.9 percent to $28.59 while Target Corp dropped 2.6 percent to $56.45. The S&P retail index lost 1.2 percent.
"Retail sales were mixed at best," said Allen Sinai, chief executive of Decision Economics Inc in New York. "As far as consumer fundamentals go, we're better than we were a few months ago, but we're still far from the good old days." 

Initial jobless claims posted their biggest weekly drop since May 2011 and countered Wednesday's weaker report on private-sector hiring. 

The Institute for Supply Management's report on Thursday showed the pace of growth in the large services sector slowed more than expected in April, with drops in both new orders and employment. That was in contrast to the ISM's report on Tuesday, which showed manufacturing activity picked up in April. 

"This is a continuation of the volatility and fits and starts we've seen in economic data, and that's causing investors to take a wait-and-see attitude before tomorrow," said Chuck Carlson, chief executive of Horizon Investment Services LLC in Hammond, Indiana.
General Motors Co lost 2.6 percent to $22.33 after analysts said the carmaker's North America outlook implied results for the first nine months of the year would fall short of expectations. 

Health Net Inc slid 27.6 percent to $27.03 after profit missed expectations and the insurer cut its forecast. The Morgan Stanley healthcare payor index <.HMO> dropped 4.4 percent. 

Of the 391 companies in the S&P 500 index reporting results, 68.3 percent have exceeded expectations, according to Thomson Reuters data through Thursday morning. 

In the mergers-and-acquisitions arena, Dutch food and chemicals group DSM agreed to buy medical device maker Kensey Nash Corp for $360 million. News of the deal drove Kensey Nash shares up 32.2 percent to $38.34.