HP, IBM Shares Fall With Dow on Weak Jobs Report
Word that the U.S. unemployment rate remained stuck in June at 8.2 percent after employers added only 80,000 jobs whacked the Dow Jones Industrial average, causing it to fall by nearly 2 percent Friday. And two tech stocks took more than their share of the burden: Hewlett-Packard and IBM.
Shares of HP fell the most of all the Dow stocks Friday, dropping 82 cents, or more than 4 percent, to $19.46 by 2:15 pm ET. The shares have been scraping along the bottom near a seven-year low for several weeks now. Their lowest point yet came on June 28 when they traded at $19.12.
Also falling today was IBM, shares of which dropped $5.25, or 2.7 percent, to $190.04. It was the lowest that IBM shares had traded at since early June. It was the Dow’s fourth-worst performer.
The primary concern is that the slowdown in hiring indicates that companies feel less confident in the state of the overall economy. HP, which in May said it would cut 27,000 jobs worldwide by the end of 2013, isn’t exactly helping the employment picture. But it’s also heavily exposed to Europe, where currency and sovereign debt concerns have weighed on the economy. HP does about 35 percent of its business there.
Worries about Europe hurt IBM, too, though weighing more heavily was a Thursday report by BMO Capital analyst Keith Bachman, who trimmed his revenue estimate, saying he expects the company to report sales below the Street consensus. IBM’s main weakness, Bachman argues, will be an unfavorable foreign exchange rate that reduces revenue by about 3 percent.