Nokia and Payroll Data Weighs on Stock ETFs

June 1st at 10:53am by Tom Lydon

Stock exchange traded funds (ETFs) opened lower on Wednesday as weak payroll data became the latest in string of soft economic reports.

The US private sector added few jobs in May as employers faced rising signs the economy is entering a soft patch in a long, fragile recovery from recession. Payroll firm ADP said the nonfarm private sector added 38,000 jobs in May, after a gain of 177,000 in April. The sharp slowdown was well below the consensus estimate that 170,000 jobs would be added and offered a warning signal ahead of the government’s May jobs data due Friday. The Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF) surged over 2% early Wednesday as investors expected an interest rate decline.

European stocks traded flat to lower Wednesday, with shares of Nokia Corp. NYSE: NOK) leading decliners for a second day in the wake of a profit warning, while Bank of Ireland rebounded after heavy selling in the prior session. Shares of Nokia tumbled more than 7% as brokers lined up to cut ratings, earnings-per-share estimates and target prices for the mobile-phone company. Helping to tug Europe lower, some energy-related shares gave back part of the prior day’s gains as crude-oil prices fell to $102.62 a barrel. The iShares S&P Europe 350 Index ETF (NYSEArca: IEV) is flat in early trading.

Many Asian markets ended with small gains on Wednesday after data showed Chinese manufacturing activity continued to ease in May, but not slow enough to raise an alarm. Stocks of several regional companies that depend on Chinese demand advanced, including Australian resource producers and Japanese machinery makers. Hong Kong stocks fell to snap a six-session winning streak, led by a decline in Chinese financial and property shares. “China may be heading toward a more complicated [second half of 2011], with persisting inflation, slowing growth and continued monetary tightening,” Credit Suisse economist Dong Tao said in emailed comments. The ProShares UltraShort FTSE China ETF (NYSEArca: FXP) is up 2.5% so far today.

Gregory A. Clay contributed to this article

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