Wall Street Cautious Ahead of Employment Report

On Wall Street, stock prices fell for the second consecutive day on Thursday as investors remained cautious ahead of the release of the employment report in the U.S., which could significantly impact market direction.

The Dow Jones index weakened by 49 points, or 0.36 percent, to 13,860 points, while the S&P 500 slipped 0.26 percent to 1,498 points, and the Nasdaq index fell 0.01 percent to 3,142 points.

For some time now, there has been no news that could spur further increases in stock prices, so investors have been cautious in recent days. However, companies continue to report better quarterly results than expected. Yet, very little was anticipated.

According to Thomson Reuters data, of the 231 companies in the S&P 500 index that have reported earnings so far, 69.3 percent exceeded analysts’ expectations, which is a better average than in the past four quarters.

At the same time, corporate earnings in the fourth quarter of last year increased by 3.7 percent compared to the same period the previous year, which is higher than the expected earnings growth of 1.9 percent at the beginning of the earnings season, but lower than the 9.9 percent that was estimated in October of last year.

Recent macroeconomic data has also not been impressive. After ADP, the largest U.S. employment company, reported an increase in private sector jobs in January on Wednesday, government data yesterday indicated a rise in unemployment last week.

As a result, the government’s employment report, to be released on Friday, is eagerly awaited. In a Reuters survey, analysts estimate that the number of jobs in the U.S. increased by 160,000 in January, 5,000 more than the previous month. The unemployment rate is expected to remain unchanged at 7.8 percent.

Despite the decline in the last two days, the S&P 500 index recorded its largest increase this month since October 2011. This is primarily due to a strong surge in stock prices at the beginning of the month, after the ‘fiscal cliff’ was circumvented in Washington.

Additionally, the S&P index has not recorded a stronger growth than this year’s 5.1 percent in January since 1997. Stock prices also fell on European exchanges yesterday. The London FTSE index weakened by 0.73 percent to 6,276 points, while the Frankfurt DAX slipped 0.45 percent to 7,776 points, and the Paris CAC fell 0.87 percent to 3,732 points.