STOCKS FALL, NASDAQ TUMBLES: Here’s What You Need To Know

MYLES UDLAND MARKETS  JUL. 9, 2014, 4:00 AM

REUTERS/Baz Ratner

Stocks fell for the second straight session, with the Nasdaq leading the way lower, falling more than 1.3%. The situation in Israelalso remains highly unstable, as geopolitical events are once again on the mind of investors. 

First, the scoreboard:

• Dow: 16,909.85, -114.4, (-0.7%)
• S&P 500: 1,964.67, -12.9, (-0.7%)
• Nasdaq: 4,394.12, -57.4, (-1.3%)

And now, the top stories of the day:

1) The latest Job Openings and Labor Turnover Survey, or JOLTS, showed that U.S. job openings surged to 4.635 million in May. The report, which is one of Federal Reserve Chair Janet Yellen’s favorite economic reports, was expected to show job opening fell to 4.35 million compared to 4.455 million in April. The report also showed that job quits, seen as a sign of confidence as you’d expect those who quit their job to believe they can get other work, increased to 2.527 million from 2.467 million. Following the report, Chris Rupkey, Chief Financial Economist at Bank of Tokyo-Mitsubishi, said, “4.635 million job openings out there in May: go get yours today. But you know what, job openings are going straight up, the official press release downplaying the data saying there were 4.6 million job openings on the last business day of May, little changed from 4.5 million in April… Little changed, are you kidding? The trend is straight up… Net net, economists got a jolt in the arm this morning for those looking for better times ahead. The number of job openings, especially in 2014, is soaring. Things could literally not be much better.”

2) Following the JOLTS report, Cooper Howes at Barclays noted that the ratio of unemployed job seekers per job fell to 2.11, its lowest level since 2008. Howes said, “This ratio has declined steadily in recent years and currently stands below the average of 2.18 seen from 2002 to 2006 even though the unemployment rate averages 5.4% during that time. In our view, this suggests that there is little slack remaining in labor markets and that wage growth will pick up more quickly than it did at similar levels of the unemployment rate in past cycles.” 

3) Another piece of economic data was also released today, the NFIB Small Business report, which showed the Small Business Optimism Index fell 1.6 points in June to 95.0. In its report, the NFIB said, “The Index did manage to stay above 95, which seemed to be a ceiling on the Index since the recovery started. The good news is that the job components improved again, reaching levels seen only in strong private sector economic times. The bad news is that capital outlays and planned spending faded along with expectations for improving business conditions.”

4) Two Federal Reserve Presidents spoke today and diverged on their views of recent inflation data. Narayana Kocherlakota, President of the Minneapolis Federal Reserve, said in remarks before the Minnesota Business Partnership said that the recent jumps in inflation are “purely transitory.” Kocherlakota added that, “What you should take away, though, is that I currently see the probability of inflation’s averaging more than 2 percent over the next four years as being considerably lower than the probability of inflation’s averaging less than 2 percent over the next four years.”

5) Jeffrey Lacker, President of the Richmond Federal Reserve said in remarks made in Charlotte, North Carolina that inflation, “has bottomed out.” Lacker said, “While the inflation numbers will often run hot or cold for several months at a time, the latest numbers suggest that inflation has bottomed out and is moving toward the Committee’s target. I expect that firming trend to continue this year.” Unlike Kocherlakota, however, Lacker is not currently a voting member of the Federal Open Market Committee, which decides the path of monetary policy in the U.S. The minutes from the latest FOMC minutes are expected to be released tomorrow afternoon. 

6) In the markets it was an ugly day for stocks, especially some of the internet-related so-called “momentum” stocks that took a beating in March and April. Shares of companies including Zulily, Splunk, FireEye, Yelp, and Twitter all fell more than 7% as the Nasdaq, which houses many tech-related issues, fell more than 1.4%. The Russell 2000 Index, which houses many of the smaller, more volatile stocks in the market, fell 1.3%. 

7) In corporate news, aluminum giant Alcoa is expected to report second quarter earnings after the market close, marking the unofficial start of corporate earnings season. Analysts were looking for earnings per share of $0.12 on revenue of $5.66 billion. Ahead of corporate earnings, keep in mind these 50 stocks, courtesy of Bespoke Investment Group, which make the biggest single-day moves following their earnings reports.