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Stocks slip as investors take break from rally
2009-09-17
NEW YORK - A surprise drop in unemployment claims couldn't fuel another day of gains for the stock market. Stocks posted modest losses in quiet trading Thursday after a three-day advance. Traders found little in the weekly employment data, or in reports on housing and manufacturing, to provide new encouragement about an economic recovery. Stocks surrendered early gains around midday and the Dow Jones industrial average ended with a loss of 8 points. Lackluster earnings reports from FedEx Corp. and Oracle Corp. added to investors' caution. The stock market has risen in eight of the past 10 days and hopes for a recovery have propelled the Standard & Poor's 500 index up 57.5 percent from a 12-year low in early March. The pace of the gains has brought warnings from analysts that stocks have risen too quickly. "This market has become kind of saturated with good news," said Jeff Kleintop, chief market strategist at LPL Financial. The Labor Department said workers filing for jobless claims for the first time dipped to 545,000 last week from an upwardly revised 557,000 the previous week. Economists polled by Thomson Reuters were expecting claims to rise. It was the lowest level of new claims since early July, indicating job cuts could be easing. However, those continuing to file for claims came in just above analysts' forecasts at 6.2 million. Many economists consider unemployment to be the biggest obstacle to a rebound in the economy. The Commerce Department said housing starts rose in August to their highest level in nine months amid a jump in apartment building. The increase was just below the pace economists had forecast. Similarly, the Philadelphia Federal Reserve's index of regional manufacturing conditions rose for a second straight month to its highest level since June 2007. However, a drop in new orders from August worried some investors. Weaker sales at FedEx and Oracle stirred concerns about how corporate revenue will hold up for the July-September quarter. In the prior quarter, companies relied on cost-cutting, not revenue growth, to boost earnings. David Chalupnik, head of equities at First American Funds, still expects stocks will push higher but said a break is necessary. "Eventually the market does need to take a breather," he said. The Dow Jones industrial average fell 7.79, or 0.1 percent, to 9,783.92. On Wednesday, the Dow jumped 108 points to a high for the year. The S&P 500 index fell 3.27, or 0.3 percent, to 1,065.49, and the Nasdaq composite index fell 6.40, or 0.3 percent, to 2,126.75. Kleintop is encouraged that some of the market's recent gains have been moderate and that investors remain skeptical. The counterintuitive logic of Wall Street would argue that all the predictions of a slide could keep the rally going. "It's been kind of a steady grind over time bringing investors kind of kicking and screaming back into this market," he said. Bond prices jumped, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.39 percent from 3.48 percent late Wednesday. The dollar was mixed against other currencies, while gold prices fell. Among stocks, FedEx fell $1.74, or 2.2 percent, to $76.46 and Oracle slid 61 cents, or 2.8 percent, to $21.52. American Airlines' parent AMR Corp. jumped $1.45, or 19.7 percent, to $8.80 after the company said it secured $2.9 billion in cash and financing. Crude oil fell 3 cents to settle at $72.47 per barrel on the New York Mercantile Exchange. About three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 6.7 billion shares compared with 6.9 billion Wednesday. The Russell 2000 index of smaller companies fell 1.91, or 0.3 percent, to 615.47. Overseas, Britain's FTSE 100 rose 0.8 percent, Germany's DAX index gained 0.5 percent, and France's CAC-40 rose 0.6 percent. Japan's Nikkei stock average jumped 1.7 percent.
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