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.
More from TheStreet
- Yahoo Rising From the Ashes
- If Your Head's in the Cloud, Buy Oracle
- Microsoft's Surface to Compete with iPad
We are reaping the fruits of what we sowed years ago and with the direction our current administration wants us to go.
1. NAFTA - meant to bring our economy to the level of other Third World Countries - and to move jobs from this country to these Third World Countries.
2. HOUSING - a culture that said we will make sure everyone in this country is a homeowner. If you have a pulse, we will built a home for you. No job- no problem, no money for down payment- no problem - you can be a renter with a deed, bad credit - no problem. Now we have way to many houses for the REAL DEMAND - NO PROBLEM - WE ARE NOW BUILDING APARTMENTS FOR THOSE WHO GOT HOSED AND MADE DECISIONS AND PROMISES THEY COULD NOT KEEP.
3. TAX POLICY FOR HOUSING - want to tap your equity (so you can maybe deduct 25% of the interest you pay on your taxes) to live a lifesyltle of the KARDASHIANS -no problem. We have this product called an ATM - HOME EQUITY EATING LOAN - borrow 125% of your equity, pay interest only and prop up our false economy.
4. MIDDLE CLASS - the demise of this class - see above decisions. By the way these decesions go back to a least the Clinton administration and move forward to today. This has not been one party but both parties.
I AM THE UNITED STATES GOVERNMENT AND I AM HERE TO HELP YOU. WOULD YOU GIVE ME MORE OF YOUR MONEY, AS I KNOW HOW TO SPEND IT BETTER THAN YOU DO!!!
boy i hope that's not just a wild dream!
>>>>>Anyone else hearing the rumor that the SCOTUS is upholding the Arizona immigration law on a 5-4 vote and striking down Obamacare in it's entirety on a 6-3 vote at 1pm?<<<<<
Example = Greece, Italy, Spain , etc etc etc
When everything is free (YES we can !)
Surprise -No one works !
Who pays the deadbeats?
Why would last weeks unemployment be revised down? Did Oklahoma call up and say oh we gave you the wrong number, it was actually 2000 less applied? Wouldnt the likely scenario be, late filings being added to the numbers, so basically the number would always be revised upwardly? That is what I always assumed.
(He has surpassed the leader stage with this weeks 2 actions)
DEAR EMPEROR !
Dear Emperor and Holder concoct a story to discredit the NRA. R's etc
You know the , "bible touting , gun carrying" crowd blah blah.
They sell assault weapons to the Mexican cartels to create an outrage and then blame the R'S
See what dirty scumbags they are?
Think about that - what ANIMALS would do such a thing ?
What happens ?
An American border agent gets shot with these same guns as well as hundreds of innocent Mexican civilians
Obuma and holder lie through their teeth and they get away with it?
No, no , no.
This is Obuma's Waterloo, trust me.
He's going down
First , he will throw Holder under the bus , just watch.
But he's not wiggling out of this one.
Look how much coverage it gets by the "main stream" media too!
Look at this rag , not a peep.
No, the media is not in bed with Soros , I mean Obuma.
It all comes down to:
To vote for this bum again is beyond believe.
All you people who voted him in the first time
SHOULD HANG YOUR HEAD IN SHAME !!
You owe us -- make it right in 2012, correct your error and vote Romney !
Save the country
What many American's don’t realize is that we are beyond any point of fixing our massive debt. Our ridiculous Keynesian debt-driven financial model has never worked and it has reached critical mass now. Do any of you honestly believe the same people who for over 70 years have been creating this debt are magically going to fix it all now? By the way PLEASE don’t embarrass yourselves with the dysfunctional argument that our debt was somehow created over the past decade or so.
As John Williams of Shadow Government Statistics states, if the U.S. government used GAAP accounting principles the REAL U.S. deficit would be about $5 trillion dollars annually. As he explains, “Generally, you'll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That's 5 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly.”
The U.S. government is basically unsustainable and bankrupt. The combined total for all "U.S. government bailouts" and "U.S. government guarantees" related to the financial crisis comes to a grand total of over 20 trillion dollars. Also, the total "unfunded liabilities" of the U.S. government are soon crossing $120 trillion. A majority of Americans believe the economy is in a permanent state of decline. They’re right. To believe a few spending cuts or a few tax increases on the mean nasty rich people will fix it all is delusional.
Unfortunately none of the criminals we have trespassing in our government want to fix it. Remember, they are in this job to be reelected, no more, no less.
Buckle up America, we’re in for a long bumpy rough ride
I'm not sure how you can have the UE number fall from last week but have the 4 week average worse than last week............. OOooo... It must be that one step forward and two step back thing with the adjusted numbers from last week..... every f in time.
Financial News = Propaganda
To all the pundits and posters:
It's a whole different economy now!
Left or Right, we cannot do the same things we used to, to "recover".
Game has changed.
No one seems to get that.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
U.S. equity futures trade modestly lower amid cautious overseas trade. The S&P 500 futures are off by 0.1%.
Looking at overnight developments: ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
LATEST MARKET DISPATCHES
- No more Dispatches; here's where to find market news
The Market Dispatches column has been discontinued. Here's where to find the latest stock and business news on MSN Money, and the latest from market writer Charley Blaine.
- Dow falls 59 as late-day gloom kills a rally
- Stocks held back by fiscal-cliff worries
- Stocks suffer worst weekly loss in 5 months
- Dow off 121 as post-election swoon continues
- Dow slumps 313 after Obama's re-election
- Dow jumps 133 as Americans head to the polls
When it comes to efficiency gains, a watt saved is a watt earned.