Stocks feel bear's breath, jobs data ahead
NEW YORK (Reuters) - Stocks will start the second half of 2008 staring into the jaws of a bear market.
At Friday's closing bell, it looked like there was little relief in sight from runaway oil prices and the lack of reassurances from bank about their already gloomy outlooks.
Investors will face a blitz of economic data in the holiday-shortened week, with the marquee number coming in Thursday's payrolls report for June.
Recession fears are rising with crude oil's dizzying spiral to a succession of record highs and the relentless stream of forecasts for more bank write-downs. When the second quarter ends on Monday, the U.S. market may finish June with its worst monthly percentage decline since September 2002.
"The combination of a banking system that is on its knees and high commodity prices is just making investors nervous," said Ray Rund, managing director and head of research at Shaker Investments in Cleveland, Ohio. "Even though we are not technically in a recession, it certainly feels that way."
U.S. oil futures shot up to a record high just a penny shy of $143 a barrel on Friday -- wrapping up a week when the president of OPEC predicted that oil prices could rise as high as $170 in the coming months. Gold hit a one-month high.
The Dow Jones industrial average .DJI finished the week down 4.2 percent, while the Standard & Poor's 500 Index .SPX slid 3 percent, and the Nasdaq Composite Index .IXIC dropped 3.8 percent. It was the worst week for the Dow and the Nasdaq since February 10.
SHRINKING PAYROLLS, SLOWER FACTORIES
The outlook for the U.S. job market is grim, based on forecasts for Thursday's payrolls report. Economists polled by Reuters expect a loss of 60,000 jobs in June, compared with a decline of 49,000 in May. The U.S. unemployment rate, however, is predicted at 5.4 percent, a slight improvement from May's 5.5 percent, which was the highest since October 2004.
Thursday's data will include the Institute for Supply Management's June reading on the vast services sector -- a day before the market closes for the Independence Day holiday on Friday. The ISM service-sector index is pegged at 51.0 in June, compared with 51.7 in May, the Reuters poll showed.
On Tuesday, two reports will get scrutiny: the ISM's June index on the U.S. manufacturing sector and U.S. car sales.
The ISM manufacturing index is forecast at 48.6 in June, down from May's 49.6, with a reading under 50.0 signaling contraction, the Reuters poll showed.
Gasoline prices at $4 a gallon are slashing the demand for gas-guzzling sport utility vehicles. This week, the stock of Dow component General Motors Corp (GM.N) plummeted to a 53-year low after Goldman Sachs cut its rating on GM to "sell" and warned it would have to raise capital.
Domestic car sales probably declined in June to an annualized pace of 5.29 million units from May's rate of 5.36 million, while domestic truck sales are predicted to have slowed to an annualized rate of 4.92 million in June from May's 5.12 million, the Reuters poll showed.
The ADP National Employment Report, a private employment survey, is due out on Wednesday, along with a report on May factory orders. Continued...
