Stock Market News for June 4, 2009

U.S. stocks slumped for the first time in five sessions after a report showed U.S. employers cut more jobs than expected.  A government report showing factory orders grew less than expected also dragged shares lower.  Meanwhile, Fed Chairman Ben Bernanke cautioned that the government cannot borrow indefinitely to finance the shortfall and urged lawmakers to work towards reducing the fiscal deficit. The DJIA declined more than 65 points to 8675, and the S&P, while holding above a key technical level of 928, closed the day 1.4% down.  Technology focused NASDAQ was off 0.6%.  Trading continued to remain light with only 1.3 billion shares exchanging hands.  Market breadth was negative as declining stocks outpaced advancing issues by a seven-to-three margin. The US dollar gained versus other major currencies, closing up 1.1% against a basket of currencies.

Stock futures point to a higher opening on the Wall Street, amid ECB and BoE interest rate decisions and weekly employment numbers and retailers' May same-store-sales figures, which is expected to have dropped 3.6%, according to Thomson Reuters (NYSE:TRI - Analyst Report).

All ten industry groups on the S&P 500 lost ground Wednesday, with basic material and oil and gas shares, down 4.2% and 3.6%, respectively, leading the decliners. A sharp decline in oil prices also hurt energy stocks. Crude prices dropped 3.5% on an unexpected rise in weekly US inventory.  Valero Energy (NYSE:VLO - Analyst Report), which said it expects to report a second quarter loss, plunged 18%; Alcoa (NYSE:AA - Snapshot Report) retreated 4.3%; Freeport-McMoRan (NYSE:FCX - Analyst Report) shares dropped 5.7%. Among oil companies, Exxon Mobil (NYSE:XOM - Analyst Report) declined 1.2% and Chevron (NYSE:CVX - Analyst Report) declined 1.6%; Marathon Oil (NYSE:MRO - Analyst Report) plunged 7.2% and ConocoPhillips stocks (NYSE:COP - Analyst Report) registered a 4.8% decline.

In his prepared testimony to the House Budget Committee, Bernanke urged lawmakers that they should commit to control the nearly $2 trillion budget deficit.  The Fed Chairman also reiterated that the pace of economic contraction appears to be slowing.  The White House estimates that the budget deficit will reach around $1.8 trillion this year and decline to about $900 billion by 2011.

On Wednesday, ADP Employer Services reported US employers shed 532,000 jobs in May, more than the 525,000 expected.  The numbers, nevertheless, were fewer than last months' downward-revised 545,000.  Factory orders improved in 0.7% in April, versus expectations of a 0.9% gain, and up from the downward-revised 1.9% drop in March.

Credit Suisse's (NYSE:CS - Analyst Report) equity analyst also cautioned against the current valuation levels given the recent spate of stock offerings and weak economic conditions.  Nevertheless, the analyst maintained a 920 S&P projection for 2009. According to Bloomberg data, the S&P currently is priced at 15.5 times earnings, its most expensive since last October, although below the 19.8 times monthly average of the past decade.