RTRS: US STOCKS-Lower open eyed on employment gloom, Alcoa
U.S. stocks headed for a slide at the open on Wednesday as data showing further labor market deterioration heightened worries about the severity of the recession and Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) announced plans to slash output.
The gloom from the ADP private sector employment report presented a major headwind for the market, two days before the key U.S. nonfarm payrolls report for December. For more see [ID:nN07472855].
"Couple that with the news of Alcoa cutting jobs from after the close last night and I don't care who you are, it's got to make you pause because it's pretty bleak," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
"There's always fresh optimism at the start of the year, but this could dampen that very, very quickly."
S&P 500 futures SPc1 slipped 12.90 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 dropped 107 points while Nasdaq 100 NDc1 futures fell 18.5 points.
In another sign of tough economic times, Alcoa Inc, a Dow component, said after the bell on Tuesday it would cut more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminum production in the face of the global economic downturn. [ID:nN06444898].
Alcoa shares were down 6 percent at $12.12 in premarket trade.
According to ADP, a private employment service, U.S. private employers shed 693,000 jobs in December, up sharply from the revised 476,000 jobs lost in November and far more than economists estimated.
President-elect Barack Obama has proposed the largest U.S. infrastructure investment since the 1950s and massive tax cuts for consumers and businesses but it is uncertain how soon this will translate into an upturn in profits to sustain the market's attempted recovery since its November bear market low as job losses mount.
The benchmark S&P 500 .SPX has risen 24 percent since its Nov. 21 low. (Additional reporting by Ryan Vlastelica; Editing by James Dalgleish)
