Stocks flat after housing, job reports

The number of new people seeking unemployment benefits declines. 3G Capital agrees to buy Burger King for $4 billion. Dell gives up bid for 3Par. Factory orders rise less than expected.

By TheStreet Staff Sep 2, 2010 8:00AM

TheStreetBy Sung Moss, TheStreet

 

Updated at 1:40 p.m. ET

 

Stocks were little changed as investors weighed last week's decline in new jobless claims and a better-than-expected increase in pending home sales.  

 

At 1:40 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 2.3 points at 10,272. The S&P 500 ($INX) was up by 3.9 points, or 0.4%, at 1,084. The Nasdaq ($COMPX) was rising by 11 points, or 0.5%, at 2,188.

 

The number of new people filing for unemployment insurance fell by 6,000 to 472,000 during the week ended Aug. 28, the Labor Department said. Economists had expected to see an increase of 2,000, according to Briefing.com. The report comes a day before the government's jobs report for August.  

Fred Dickson, chief market strategist at Davidson & Co., said investors are unwilling to make definitive moves ahead of Friday's jobs report. Estimates provided by Briefing.com are calling for nonfarm payrolls to drop by 120,000 and the nation's unemployment rate to rise to 9.6%.

 

"No one's going to jump into the market ahead of tomorrow's data," Dickson said. "Even more impressive is that we're holding the gains we built up from yesterday."

 

Shares for American Express (AXP), Kraft Foods (KFT) and Verizon (VZ) were weighing most heavily on the Dow, while Alcoa (AA), Home Depot (HD) and Boeing (BA) were putting in the average's best gains.

 

The Labor Department also said worker productivity decreased at an annual rate of 1.8% during the second quarter, more than the original estimate of 0.9%. Economists had expected a 1.7% drop. Unit labor costs jumped 1.1%, as expected.

 

The Commerce Department said factory orders rose 0.1% in July after declining a revised 0.6% in June, falling short of economists' estimates for 0.3% growth. Excluding transportation, orders fell 1.5% in July. The weak report contrasts with yesterday's better-than-expected manufacturing report from the Institute for Supply Management.

 

An index that measures the number of contracts to buy previously owned homes rose 5.2% in July, better than expected, with gains in all four regions, said the National Association of Realtors. Economists had expected the index to fall 1.1%. The group's index tumbled a revised 2.8% in June.

 

Lawrence Yun, chief economist for the NAR, said "home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery."

 

A fire broke out on an offshore energy platform owned by Mariner Energy (ME) in the Gulf of Mexico, a region still reeling from the aftereffects of the massive BP (BP) oil-spill disaster. Early reports of an explosion appear to have been mistaken or exaggerated. Workers were sandblasting the platform when the fire occurred, and production had been halted. Mariner shares were falling 2.9% to $22.67.

 

Fast-food chain Burger King (BKC) has agreed to be acquired by 3G Capital for $4 billion, or $24 a share, a 46% premium over yesterday's closing price. Talk of the potential deal began circulating after reports in The Wall Street Journal and the New York Times. Burger King shares were rising 24% to $23.40.

 

Dell (DELL) said it was ending its bid to buy data storage firm 3Par (PAR) after Hewlett-Packard (HPQ) sweetened its bid for 3PAR by $3 to $33 a share, or $2.1 billion. 3Par said in a statement the HP bid was superior to Dell's offer of $32. 3Par shares were adding 2.4% to $32.84. Hewlett-Packard were up 0.5% to $39.41, while Dell's shares were rising 2.7% to $12.44.

 

Many retailers are releasing August sales figures for stores open at least a year, which will reflect the impact of back-to-school shopping. Discount chain Target (TGT) said same-store sales rose 1.8%, short of the 2% gain analysts surveyed by Thomson Reuters had expected. Department store Macy's (M) said same-store sales climbed 4.3%, beating the 4% increase analysts had forecast. Target shares were rising 0.7% to $52.61, while Macy's stock was inching up 0.2% to $20.23.

 

Wholesale retailer Costco (COST) said comparable-store sales rose 7% in August. Family Dollar (FDO) said its sales increased 6.1% in its fiscal fourth-quarter. Costco shares were climbing 1.7% to $58.74. Family Dollar's were up 0.5% at $43.51.

 

Del Monte (DLM) shares were falling 1.2% to $13 after the company reduced its full-year sales growth target to 1% to 3%. Del Monte's previous sales growth guidance was in the range of 2% to 4%. The company reaffirms its full-year earnings from continuing operations forecast of $1.38 to $1.42 a share.

 

General Motors is expected to price its initial public offering on Nov. 17, according to Reuters. 

 

Federal Reserve Chairman Ben Bernanke told a congressional panel that new financial reform laws will help prevent the problems that brought down Lehman Brothers in 2008. The panel is evaluating the events that led to the financial meltdown.

 

Natural gas inventory levels rose higher last week, the Energy Information Administration said Thursday, adding another 54 billion cubic feet to underground storage in the lower 48 states. The increase landed at the lower end of an expected range that called for an injection between 53 to 57 billion cubic feet, according to analysts polled by Platts.   

 

The October natural gas contract was falling by 1 cent at $3.75 per million British thermal units. Crude oil for October delivery was losing 42 cents to trade at $73.49 a barrel.

 

The December gold contract was trading higher by $4.40 at $1,252.50 an ounce.

 

The benchmark 10-year Treasury note was down 2/32, boosting the yield to 2.587%.

 

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.1%.

 

Wednesday's strong ISM report boosted markets in Asia. Hong Kong's Hang Seng rose 1.2% higher, while Japan's Nikkei gained 1.5%. The FTSE in London was behind by 0.1% and the DAX in Frankfurt was shedding 0.2%.

 

After closing the books on their worst August since 2001, stocks kicked off September with 2% gains Wednesday. The Dow rose 255 points on upbeat economic data in China and Australia, and a surprisingly strong manufacturing report in the U.S. helped boost investor optimism. 

 

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