Stocks tumble on weak economic data
The Dow falls more than 150 points after reports show weakness in US employment, home sales and manufacturing. China's factory activity slumps. The eurozone continues to slow.
By Andrea Tse
Stocks tumbled Thursday as markets digested weak economic reports on U.S. employment, home sales and manufacturing, as well as disappointing data out of China and the eurozone.
The Labor Department reported that weekly initial jobless claims for the week ended June 16 fell to 387,000 from an upwardly revised 389,000. A level below 350,000 is associated with a consistent improvement in the unemployment rate. Economists surveyed by Briefing.com were expecting jobless claims of 380,000. The four-week moving average was 386,250, an increase of 3,500 from the previous week's average of 382,750.
Continuing claims for the week ended June 9 were 3,299,000, unchanged from the preceding week's revised level. Economists, on average, had expected a level of 3,250,000.
"After a fairly substantial period of constantly lower jobless claims, a new, more unwelcome trend higher has taken hold," BTIG economists said. "This of course has ramifications for the broader monthly jobs report but clearly, given the current trend, a meaningful pickup in monthly job additions looks unlikely."
The National Association of Realtors reported that sales of existing homes declined by 1.5% in May to a seasonally adjusted annual rate of 4.55 million. Sales have risen 9.6% from a year ago, evidence that home sales are slowly improving, The Associated Press said. The pace remains below the 6 million economists consider healthy. The average rate on a 30-year fixed mortgage fell this week to a record low of 3.66% for the seventh time in eight weeks, AP said.
Reuters reported that U.S. manufacturing in June grew at its slowest pace in 11 months and sector hiring slowed as international demand for U.S. products dropped, according to Markit's "flash" manufacturing Purchasing Managers Index. The reading fell to 52.9 from 54.0 in May, the lowest since July 2011.
The Conference Board's index of leading economic indicators rose 0.3% last month after falling 0.1% in April. The index is now at 95.8. The last time it was higher was June 2008, six months into the recession, AP reported. Before that, the index routinely topped 100.
Manufacturing in the Philadelphia region contracted for the second straight month, more evidence of a faltering economy, AP said. The Philadelphia Federal Reserve Bank index sank in June to minus 16.6 from minus 5.8 in May. A reading below zero indicates contraction.
Stocks finished mixed Wednesday as investors expressed mild disappointment with the Federal Reserve's much-anticipated decision to prolong its Operation Twist bond maturity extension program.
The central bank also lowered its expectations for U.S. gross domestic product growth in 2012, going to a range of 1.9% to 2.4% from 2.4% to 2.9%, and adjusted its projections for employment data to reflect slowing growth.
HSBC and Markit Economics said Thursday that the flash China manufacturing purchasing managers index came in at 48.1 in June, sinking to a seven-month low despite the recent interest rate cut by the Chinese government. Levels below 50 point to contraction.
Chinese manufacturers reported the sharpest decline in new export orders since March 2009.
"As such, we expect more decisive policy stimulus to reverse the growth slowdown," said Hongbin Qu, an economist at HSBC.
"Given the input from the HSBC report today, we forecast the official manufacturing PMI (due on 1 July) to drop to 49.5 in June from 50.4 in May, albeit owing in part to insufficient seasonal adjustments," said Yao Wei, an economist with Societe Generale. "Hence, more policy easing is in order. The People's Bank of China will probably act again in July, and, more importantly, new loans are expected to have risen close to CNY1tn in June."
The Hong Kong Hang Seng index settled down 1.3%, and the Nikkei in Japan closed up 0.82%. The FTSE in London was falling by 0.57%, and the DAX in Germany was down by 0.35%.
The Markit flash eurozone PMI composite output index came in at 46 in June, signaling that the private-sector economy shrank at a rate unchanged from May. With the exception of a marginal increase in January, the survey has recorded continual contraction since last September, with the rate of decline having gathered significant momentum in the second quarter.
Eurozone finance ministers were to discuss the continent's debt crisis and Greece in Luxembourg as Greece's new prime minister, Antonis Samaras, got ready to announce his cabinet after reaching a deal to form a coalition.
In the meantime, Greece has been placed under review by index provider MSCI for reclassification as an emerging market.
Spain met soaring borrowing costs at its auction of three-year debt as it prepares to publish information of its bank's capital needs, which will indicate how much financial support the country will require from Europe's rescue funds.
In corporate news, Rite Aid (RAD) reported first-quarter earnings Thursday that met analysts' expectations, but it lowered its sales guidance for the year. The drugstore chain reported a first-quarter loss of $30.7 million, or 3 cents a share, narrower than a year-earlier loss of $65.5 million, or 7 cents a share. Analysts were expecting a loss of 3 cents a share.
Rite Aid lowered its fiscal 2013 sales guidance to between $25.3 billion and $25.7 billion and said it expects same-store sales to decline between 0.5% and 1%. The company previously anticipated sales would be between $25.4 billion and $25.8 billion, with same-store sales between flat and an increase of 1.5%.
Red Hat (RHT) beat Wall Street's first-quarter profit expectations but posted weak billings and provided second-quarter guidance slightly below estimates.
Billings, defined as revenue plus the change in deferred revenue, came in at $310 million. Wall Street was expecting $319 million, according to Mizuho Securities analyst Abhey Lamba, who has a buy rating on the stock.
Bed Bath & Beyond (BBBY) gave a disappointing outlook Wednesday for its fiscal second quarter. The company expects earnings of 97 cents to $1.03 a share in the three months ending in August, below analysts' expectations for a profit of $1.08 a share.
Johnson & Johnson (JNJ) and the Justice Department are close to settling an investigation into the company's alleged improper promotion of the antipsychotic Risperdal, The Wall Street Journal reported, citing people familiar with the matter. The two sides are discussing a payment of at least $1.5 billion. The settlement would be one of the highest sums to date in a drug marketing case, the Journal said.
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Okay...raise your hands (including you Fat azz...er, Fat Cat)...you 'bought in' on LIE number 557 on another 'fixed' report and watched the market go up a 100+ points only now to watch it get completely FLEECED...ONCE AGAIN from the nano gamblers...
Anyone who jumps in now DESERVES what they get!
Good Morning...and welcome to......
ANOTHER MORNING AT THE BARELY SOETERO homestead.....circa 1963:
A BS: Watcha doing honey?
Lil A BS: OH notheeng...just reading this book on economics.
A BS: You burn that trash, darling. Its all lies and phony numbers anyway.
Lil A BS: But daddy, Mommy says we should read so we will be smarter.
A BS: Dont you or mommy worry your pretty little heads about that. Money is better than brains!
Lil A BS: But daddy! Why??
A BS: Cause I got this job writing lies, er I mean information, about Oboomba, and its making me money, lots of money, baby.
Lil A BS: Why?
A BS: So I can get you into Harvard.....college aint cheap ya know.
Lil A BS: Harvard? But I isnt that where President Obama went?
A BS: Get away Kid! Ya Bother Me !!!
Stay tuned for CBS News with Walter Cronkite. And dont forget to smoke Camel non filtered for that fresh, outdoors taste!
Congress, Wall Street, Fat Cat Bankers, Bill Gates, Warren Buffett, Corporations etc... that's who controls the Stock Market and the future of America. It's pretty simple to figure out why the we see the same headlines every day. These people are greedy and manipulative, but not very intelligent. Look at Obama and his lack of leadership skills...- he is the President of the United States for God Sakes and he cannot lead to save his life! Amercians are as dumb as he claims, that's why he keeps getting away with corruption.
The American Dream has now become The American Nightmere and it doesn't matter who's in office....look at the list above to see who's really in charge here.
Will we ever have a President again that will lead by example and take accountability? Prob not...
Re-read VOLCKERFAN. My answer coincides closely with his.
Better to start the race to the Top from the Mezzanine,
rather than the basement, isnt it? Well, isnt it???
Everyone else have a great day. I am off to make some money. Might kick a transient or two along the way, 'cause thats what its all about, am I right? You might say I am "helping" them get motivated to find work instead of being handouters to a socialist scheme.
Why is it you never say the same about Dems trying to rein in inauspicious money practices on Wall Street? Double standards abound, I suppose.
LOM HARVEY- Good Day!
The debt wasn't created over the last decade, it matured over the last decade. The massive waste on military and sprawl are the primary culprits because neither was properly supervised. Both are predicated on the exploitation of Oil. We don't have to make wars to lift business and we don't need coast-to-coast highways for one-person-occupied vehicles. All of our debt has been crafted by Inflationists who start with something that cost them nothing and work hard to get us to inflate societal needs, thus raising the value of their nothing and reaping the rewards without actual involvement in the work-a-day aspect.
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[BRIEFING.COM] The S&P 500 ended this week with a bang, roaring to a new all-time high on the back of stronger-than-expected economic data, influential leadership, and an ongoing appreciation for the Fed's monetary policy support.
The bullish bias was evident in premarket action as the S&P futures pointed to a higher start without the benefit of any definitive news catalyst. Stocks indeed benefited from a blast of buying interest at the opening bell on this ... More
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