US stocks dip before employment report unveiled

Stocks slid in New York today as investors focused on the US government’s forthcoming employment report, shrugging off a widely expected decision by Opec to raise its crude oil output.

Uncertainty over Intel’s mid-quarter forecast also pulled down tech shares.

The promise of more oil and a bullish report on worker productivity failed to spark a rally as many investors remained wary of taking big stakes ahead of the Labour Department report due tomorrow.

“Basically, we’re just treading water before tomorrow’s employment data,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “There’s a concern that a creeping rise in energy prices could slow the economy down more, so this is the next data point the market is looking at for guidance.”

The Dow Jones industrial average fell 67.06, or 0.6%, to 10,195.91.

The broader gauges also closed lower. The Nasdaq composite index slumped 28.72, or 1.4%, to 1,960.26, largely on weakness in the semiconductor sector. The Standard & Poor’s 500 index shed 8.36, or 0.7%, to 1,116.63.

Wall Street remained anxious about the effect higher oil prices are having on the economy despite the decision by the Organisation of Petroleum Exporting Countries to raise its production ceiling by 2 million barrels a day.

Opec agreed to raise the target by an additional 500,000 barrels a day in August if necessary, oil ministers said after meeting in Lebanon.

But with several of Opec’s 11 members already close to their output limits, some analysts are concerned the group may not be able to pump enough oil to dent prices significantly.

The report from chip bellwether Intel, due after the trading session tonight, followed several lacklustre updates from other semiconductor makers. Intel lost 60 cents to 27.41 on speculation that it might offer a forecast at the lower end of expectations.

The May jobs numbers are due tomorrow. If the number of new jobs generated during May is dramatically higher than the 225,000 the market expects, investors fear it could prompt the Federal Reserve to raise interest rates sooner, and more sharply than it might otherwise.

If the number comes in much lower, it could delay a rate hike but be viewed as a worrisome sign the economic recovery is stalling.

Reflecting continued concern about pending interest rate hikes, Bank of America adjusted its view of the insurance sector, downgrading its recommendation on Allstate and Hartford Financial Services to a “neutral” from a “buy”. Allstate shed 76 cents to 43.46 Hartford Financial lost 59 cents to 65.75.

Many of the nation’s retailers reported strong monthly sales in May - reassuring after consumers pulled back in April amid rising energy costs. Wal-Mart Stores gained 25 cents to 56.60 after announcing a 5.9 percent increase in May sales.

Sears, Roebuck, however, reported a bigger than expected drop in sales. Its share price declined 1 to 37.13.

Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, closed down 11.12, or 1.9%, at 562.44.