* Stocks fall as jobs news underscores depth of recession
* Dollar falls after weaker-than-expected ADP report
* Concern over raft of new debt supply again hits bonds
* Oil falls; U.S. crude stocks rise more than expected
(Recasts with U.S. markets, changes byline, dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Jan 7 (Reuters) - Stocks and the price of oil
fell on Wednesday after reports on greater-than-expected job
losses and crude inventories reminded investors betting on a
looming recovery that the U.S. economy is still very weak.
The dollar fell across the board, reversing sharp gains
against the euro earlier this week, as the steep job losses in
the U.S. private sector reignited fears of a deep recession.
A disappointing revenue outlook from technology bellwether
Intel Corp <INTC.O> and Alcoa Inc's <AA.N> plans to cut more
than 15,000 jobs, halve capital spending and sell businesses
also heightened concerns about the severity of the recession.
While separate data showed planned layoffs at U.S. firms
eased in December from the previous month's seven-year high,
they were up 275 percent annually as the 12-month-old recession
cuts a destructive swathe through the U.S. economy.
But a report from ADP Employer Services that said U.S.
private employers shed a more-than-expected 693,000 jobs in
December, up from a revised 476,000 jobs lost the previous
month, sent the most shivers through financial markets.
The ADP report foreshadows likely grim labor data for
December from the U.S. Labor Department on Friday and
underscored the challenge facing President-elect Barack Obama
to revive the economy with a $775 billion stimulus package.
"I can't imagine this (ADP data) is going to bode very well
for any kind of forecasting going into the nonfarm payroll and
unemployment rate numbers that we're going to see on Friday,"
said Dave Lutz, a managing director at Stifel Nicolaus in
Baltimore. "It is absolutely terrible."
In early afternoon trade, the Dow Jones industrial average
<> was down 175.63 points, or 1.95 percent, at 8,839.47.
The Standard & Poor's 500 Index <.SPX> was down 18.89 points,
or 2.02 percent, at 915.81. The Nasdaq Composite Index <>
was down 35.14 points, or 2.13 percent, at 1,617.24.
Also weighing on stocks was a Time Warner Inc <TWX.N>
forecast of a fourth-quarter loss, sending its stock down 5.9
percent. Intel fell 3.9 percent and Alcoa tumbled 8.5 percent.
European shares ended lower, snapping a six-day winning
streak, as weak U.S. employment data weighed on sentiment and
commodity stocks were hit by lower crude and metal prices.
The pan-European FTSEurofirst 300 <> index of top
European shares provisionally closed down 1.3 percent at
877.85.
Stocks fell after the recent run-up in prices and were hurt
by the suicide of German billionaire Adolf Merckle, which gave
credence to the depth of the credit crisis and its damage to
Germany, said David Buik, a partner at BGC Partners.
The ADP jobs report and decline in U.S. mortgage
applications only adds to the grim sentiment, Buik said.
"This has been a wake-up call for the European markets.
Sentiment has changed and profit takers have come in," he
said.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 1.12 percent at 81.897.
Against the yen, the dollar <JPY=> fell 1.07 percent to 92.66.
The euro <EUR=> was up 1.25 percent at $1.3676 from a
previous session close of 93.660.
Oil slid more than 7 percent after a U.S. government report
showed inventories of crude rose much more than expected. U.S.
light sweet crude oil <CLc1> was off $3.76 to $44.82 a barrel.
Crude oil stocks rose by 6.7 million barrels, the U.S.
Energy Information Administration said, more than the 900,000
barrel increase analysts expected. Gasoline and distillate
stocks also rose.
"This is a very bearish report. Crude stocks are up due to
higher imports," said Tom Knight, a trader at Truman Arnold in
Texarkana, Texas. "The build in products is also bearish."
U.S. Treasury debt prices fell over continued concerns that
a spate of new debt supply will dilute the market, despite the
ADP report's indications of a dire U.S. employment situation.
A total of $166 billion of new government debt supply is on
tap this week, with more expected in order to help feed various
programs intended to prop up the U.S. economy.
Investors fear the huge doses of new debt issuance will
boost Treasury note yields, which move inversely to prices and
which remain not far off 50-year lows.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
18/32 in price to yield 2.52 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 4/32 to yield 0.83 percent.
U.S. gold futures dropped 3 percent to a two-week low as
investors sold heavily after signs of a worsening U.S. job
market dashed hopes of an inflation-driven gold rally.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.5 percent, on track for an eighth
consecutive session of gains, before turning negative on the
ADP report.
Japan's Nikkei share average <> rose 1.7 percent.
(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, Chris
Reese and Frank Tang in New York and Alex Lawler and Joanne
Frearson in London; writing by Herbert Lash, Editing by Chizu
Nomiyama)
