Slump on job worries, money flow to Treasuries

Small-cap stocks opened lower, pressured by concerns on the jobs front ahead of Friday’s big employment report. In addition, money flow appeared to favor “safe haven” routes like Treasury products to the detriment of equities. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.70, or 1.17%, at 733.20.

The ISM Non-Manufacturing Survey came in at 50.6, which was above the forecast of 49.5. However, the employment sub-index slipped to 45.4, compared with 47.1 last month, which offset some of the bullish implications of the headline number.

The ISM data marked the final piece of data on a very busy morning for economists. Earlier this morning, investors had to navigate through the ADP employment survey, weekly unemployment claims and the productivity report. For the record, the ADP report came in at minus 33,000, which was worse than the forecast for a dip of 20,000; the weekly unemployment claims were at 424,000, which was basically in line with the 423,000 forecast; and the productivity report came in at 4.3%, which was way ahead of the 3% projection. Who knows why productivity surged this summer (lower pay and more work by employees perhaps?), but the productivity report was basically ignored and the market remained on the defensive primarily on the ADP data.

Even though the ADP report hasn’t had a very strong correlation to the actual Labor Department report, investors are still nervous ahead of Friday’s big event. The employment report is expected to show a decline of 71,000 on non-farm payrolls, with the unemployment rate at 5.8%.

It is worth noting that interest rates continue to push lower. Rates work inversely to credit instruments, which means that demand for bonds and notes is strong. The rate on the benchmark 10-year note tumbled to the lowest point this morning . . .

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