U.S. stocks suffered moderate declines Thursday as worries about a key report on U.S. job losses weighed on sentiments.  Traders remained hesitant and cut positions as a number of disappointing July same store sales reports added to waning optimism that the recession is losing its grip.  Healthcare issues fell after JP Morgan downgraded the sector to underweight.  A $2 billion extension of the successful clunkers program failed to lift moods on the Street either.

The Dow Jones industrial average lost 25 points, or 0.3% and the broader S&P 500 index fell 5 points, or 0.6%. The technology-focused Nasdaq retreated 20 points, or 1%.    

This morning, the July jobs report surprised as the Labor Department reported that U.S. employers shed fewer jobs in July.  That unemployment rate dipped to 9.4% against expectations of a 9.6% fall helped calm shaky nerves and pushed stock futures sharply higher.  The Labor Department noted that US employers cut 247,000 jobs in July, the fewest in a year.  Dow Jones industrial average futures are up 61, or 0.7%, at 9,290. Standard & Poor’s 500 index futures are up 8.30, or 0.8%, at 1,003.20, while Nasdaq 100 index futures are up 16.50, or 1%, at 1,617.75.

Yesterday, poor July retail sales data and apprehension about the monthly non-farm payrolls report sent S&P500 shares lower and the index retreated back under the 1000 level.  Only utilities, up 0.1%, and industrials, up 0.04%, showed some strength as even financials, a major support sector over the past five sessions, headed lower.  Health care sector and telecommunications issues declined 1.1%, with oil and gas, consumer goods, and technology issues easing 0.9%.  Crude prices eased three cents to $71.94, following the downward drift of equity prices and US dollar gains.

Among the DJIA components, Procter & Gamble (NYSE:PG), off 4.5%, continued to decline as investor remain concerned over its sales outlook.  Copper prices declined sending Alcoa (NYSE:AA) down 3.6%.  Cisco’s (NASDAQ:CSCO) cautious outlook weighed on technology stocks as Hewlett-Packard (NYSE:HPQ) eased 2.4%.  JP Morgan (NYSE:JPM) shares dropped 2.5%, despite news Deutsche Bank (NYSE:DB) had initiated its coverage with a “buy” rating.  American Express (NYSE:AXP) rose 3.1% after Citigroup (NYSE:C) upgraded the stock on news of a slowing pace of credit loans losses. 

In a Thursday CNBC interview, Goldman Sachs (NYSE:GS) strategist Cohen announced, “We do think the new bull market has begun,” setting sights on a rise in the S&P500 of as much as 10% by year-end.

Zacks Investment Research