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The Markets Now: Stocks Remain Lower After ADP and ISM Reports

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Plus, bank stocks have taken a beating today.

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Stocks have remained lower today after reports indicated that private sector hiring and growth of non-manufacturing industries slowed in March. The Dow (INDEXDJX:.DJI) decreased 0.43% to 14,598.45. The S&P 500 (INDEXSP:.INX) dropped 0.76% to 1,558.37, and the Nasdaq (INDEXNASDAQ:.IXIC) fell 0.79% to 3,229.23.

ADP (NASDAQ:ADP) reported today in its March National Employment Report that US non-farm private sector payrolls increased 158,000. The median forecast of 39 economists surveyed by Bloomberg was for a 200,000 gain. In February, ADP reported that the private sector added a revised 237,000 non-farm jobs. According to the report, small businesses hired 74,000 workers, medium businesses hired 37,000 workers, and large businesses hired 47,000 workers.

The Institute of Supply Management, or ISM, reported today that its Non-Manufacturing Composite Index, or NMI, fell 1.6% from 56 in February to 54.4 in March. A reading over 50 indicates growth in the non-manufacturing sector, or 90% of the US economy. The Composite Index is based on four indicators that hold equal weight: the Business Activity Index, the New Orders Index, the Employment Index, and the Supplier Deliveries Index .
  • The Business Activity Index decreased 0.4% from 56.9 in February to 56.5 in March. Thirteen industries reported increased activity while four industries reported decreased activity. Some respondents stated they expect higher business activity in the coming months.
  • The New Orders Index fell 3.6% from 58.2 in February to 54.6 in March, marking the 44th consecutive month that new orders have increased. Some respondents reported higher demand.
  • The Employment Index dropped 3.9% from 57.2 in February to 53.3 in March. Twelve industries reported increased employment while six reported decreased employment. Some respondents said they have begun adding workers to help with new orders and help with business changes.
  • The Supplier Deliveries Index climbed 1.5% from 51.5 to 53, indicating that delivery times have slowed for the third consecutive month.
The Mortgage Bankers Association, or MBA, released the results for its Weekly Mortgage Application Survey for the week ending March 29. The Market Composite Index, which measures loan application volume, decreased 4% week-over-week on a seasonally adjusted basis and unadjusted basis. On a seasonally adjusted basis, the Purchase Index increased 1% week-over-week and increased 2% on an unadjusted basis. Plus, the Purchase Index climbed 4% year-over-year. The Refinance Index fell 6% week-over-week.

MBA's Vice President of Research and Economics Mike Fratantoni stated that purchases grew because of an almost 7% increase in the purchase applications for government loans. Borrowers likely wanted to apply for the loans before the Federal Housing Administration increased mortgage insurance premiums on April 1.

The average contract interest rate for 30-year fixed-rate mortgages with loan balances less than $417,500 decreased from 3.79% to 3.76% while contract interest rates for 30-year fixed-rate mortgages with loan balances greater than $417,500 also declined from 3.90% to 3.85%.

The Energy Information Administration, or EIA, reported that US commercial crude inventories, which excludes those in the Strategic Petroleum Reserve, climbed 2.7 million barrels week-over-week to 388.6 million barrels for the week ending March 29, 2013. The EIA also reported that US crude oil imports averaged over 7.9 million barrels per day, down 227 thousand barrels from the previous week.

Bank of America's (NYSE:BAC) stock price dropped 2.92% to $11.80. BofA Chief Brian Moynihan has summoned 100 of his regional leaders in Chicago for a private meeting where he will tell them to find ways to boost revenue. The managers will be evaluated on how well they sold products to the bank's 53 million customers.

Morgan Stanley (NYSE:MS) declined 2.56% to $21.15. Credit Suisse (NYSE:CS) analyst Howard Chen cut his rating on Morgan Stanley from "Outperform" to "Neutral" yesterday, citing that bank's stock may have run too high.

JPMorgan (NYSE:JPM) fell 2.16% to $46.94.

Citigroup (NYSE:C) decreased 2.40% to $43.05.

Merck (NYSE:MRK) jumped 2.29% to $45.94. Merck's India unit, MSD, will sue India's Glenmark Pharmaceuticals (BOM:532296) for infringing on MSD's Indian patent for the diabetes drug sitagliptin. Glenmark stated it launched two generic versions of the drug.
Twitter: @ChrisWitrak
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