June 5 - Summary of business headlines: Stocks drop more than one percent on fear Fed will still cut stimulus and new job worries; U.S. to further reduce General Motors stake; BlackBerry Q10 debuts. Conway G. Gittens reports.
Another sell-off on Wall Street and weak readings on the labor market leave investors wondering if this year's rally is as good as it gets. The Dow closed below 15,000 for the first time in a month as stock slid more than a full percent. Private employers added fewer jobs than expected in May, according to payroll company ADP; Growth in the services sector was steady last month, but an employment reading was the lowest since last July; and mortgage applications tumbled for a fourth week as mortgage rates topped 4 percent for the first time in a year. The Federal Reserve's summary of economic conditions did little to sway sentiment. Regional Fed offices characterized the economic recovery as "modest to moderate" but that provided little clue on when the Fed will curtail its bond buying program. Equities are finally waking up to a reality that the Fed will not always be there to rescue the stock market, which has kept prices artificially high, says value investor James Barksdale. SOUNDBITE: JAMES BARKSDALE, PRESIDENT, EQUITY INVESTMENT CORPORATION (ENGLISH) SAYING: "Our view is a sell-off like this is probably a positive thing in the sense that it reduces the disconnect and allows value managers like ourselves to get some better buys and put more money to work. And you don't really like to put your money to work in a market that's disconnected from reality. It is better to put it to work in one that's reflecting reality. So from our perspective the pullback is a good thing; not that we would have predicted it." On the corporate front - The Treasury Department is moving ahead with plans to unwind its stake in General Motors - taken as part of the $49-1/2 billion bailout during the financial crisis. The sale is tied to GM re-entering the S&P 500, which should give the stock a bounce and limit losses to taxpayers. BlackBerry users who can't live without that physical keyboard - finally have a new device to try out. The BlackBerry Q10 started selling in the U.S. on Wednesday. Meanwhile, the company says 60 percent of Fortune 500 companies are testing or using the system that manages its new devices, which also includes the Z10 launched earlier this year. In Europe - stocks plummeted to six-week lows ahead of Thursdays rate-setting meeting by the European Central Bank.