Stocks struggle on jobs weakness, economic worries

Updated: 6:53 p.m. ET

Stocks opened badly today, but the good news was that the major averages recovered nearly all of their losses. The Dow Jones industrials ($INDU) gained 19 points to 13,597.

The market was whacked at the open by disappointing reports on manufacturing in China and Europe, a lackluster report on U.S. initial jobless claims and a profit warning Wednesday from railroad giant Norfolk Southern (NSC) and disappointing earnings from home-furnishings retailer Bed Bath & Beyond (BBBY).

But the market turned after a manufacturing report from the Philadelphia Federal Reserve Bank wasn't as bad as feared. ConAgra Foods (CAG) shares jumped after the company raised its quarterly dividend and boosted its profit forecast.  In addition, an initial public offering from Trulia (TRLA), a real estate data site similar to Zillow (Z), generated lots of excitement. The shares closed at $24, up $7 from their offering price of $17.

After the close, shares of database software giant Oracle (ORCL) were up slightly to $32.36 from a regular close of $32.26. The company reported 53 cents in earnings per share, in line with Street estimates. Revenue of $8.2 billion was down 2% from a year ago and missed the consensus estimate of $8.42 billion by $240 million. 

While the Dow finished higher, the Standard & Poor's 500 Index ($INX) ended down 1 point to 1,460, and the Nasdaq Composite Index ($COMPX) dropped 7 points to 3,176; the index had been down as many as 26 points.

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Even if its gain was small, the Dow was higher for a third straight day; the S&P 500 and Nasdaq were lower for the third time in four days. Again, the declines were small.

The Nasdaq-100 Index ($NDX) was off 2 points to 2,862. Apple (AAPL), the largest influence, was off $3.40 to $698.70. The shares had closed above $700 on Tuesday for the first time and ended Wednesday at a record $702.10.

Futures trading suggests a modestly higher open on Friday. The market will deal with the Labor Department's monthly Consumer Price Index report as well as the University of Michigan's Consumer Sentiment Index.

Oracle hurt by problems with hardware business

Oracle shares were up 2 cents to $32.28 after hours after falling 52 cents to $32.26 in regular trading.

The lack of enthusiasm may reflect guidance for the second quarter: Sales will be unchanged or show an increase of as much as 4%, co-President Safra Catz said on a conference call. Profit, excluding one-time charges, will be 59 cents to 63 cents a share, she said. Analysts has projected 4.6% sales growth to $9.2 billion.

First-quarter net income rose 11% to $2.03 billion, or 41 cents a share, from $1.84 billion, or 36 cents, a year ago. Oracle, the largest maker of database software, said its hardware-systems products revenue declined 24% to $779 million.Brent Thill, an analyst at UBS in San Francisco, had projected only a 14% sales decline, Bloomberg News said.

The company is pushing sales of its high-end Exadata and Exalytics machines, which use Intel (INTC) chips. Sales of high- end "engineered systems" more than doubled, co-President Mark Hurd said in the statement. Sales of servers using Sun’s Sparc chip are falling.

Crude moves higher; gold is flat

Commodity prices were basically flat. Crude oil (-CL) in New York settled up 12 cents to $92.42 a barrel. Brent crude was added $2.31 to $110.50 a barrel.

The national daily average price of gasoline was $3.846, according to AAA's Daily Fuel Gauge Report. That's down from Wednesday's $3.854 and the sixth straight daily decline.

Gold (-GC) settled down $1.50 to $1,770.20 an ounce. 

Interest rates moved lower as demand for Treasury securities grew and also pushed the dollar higher against the euro. The 10-year Treasury yield was at 1.777%, down from Wednesday's 1.8782%.

 

Energy prices -- New York close (Updated)
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil (-CL)			$92.42			$92.30			-4.20%			-6.49%
(per barrel)
Heating oil (-HO)			$3.0975			$3.0440			-2.60%			6.29%
(per gallon)
Natural gas (-NG)			$2.7970			$2.7620			-0.07%			-6.42%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.7809			$2.7273			-6.46%			4.65%
(per gallon)
Brent crude			$110.03			$108.19			-3.96%			2.47%
(per barrel)
Retail gasoline			$3.8460			$3.8540			0.44%			17.40%
(per gallon; AAA)

September looks good, but the transports don't
So far this week, the Dow is off 0.2%, with the S&P 500 down 0.6% and the Nasdaq off .4% But September, historically the worst month for stocks, is bucking the trend. The Dow is up 3.7%, with the S&P 500 up 3.6% and the Nasdaq up 3.4%.

Much of the September gains come from the weeks of Sept. 3 and 10 when the Dow rose 1.7% and 2.2%, respectively. The Federal Reserve announced its economic stimulus plan on Sept. 13. But the fact is the stock market has had just one down month in the last 12 -- in June, when it fell more than 6%.

While the broad measures look solid, they can mask problems.

The Dow Jones Transportation Average ($DJT), a leading indicator for the economy, fell 141 points to 4,962 today, mostly because of Norfolk Southern, which was off down $6.58 to $66.11 -- the worst performer in the index today.

Norfolk Southern cited weakness in coal volume and merchandise shipments -- steel, chemicals and other products.

The railroad's warning has also pulled down shares of Union Pacific (UNP), CSX (CSX) and Kansas City Southern (KSU).

Only small improvement in jobless claims
Jobless claims were a disappointment, falling just 3,000 to 382,000 last week from a revised 385,000 a week before. The four-week moving average, which smooths out week-to-week volatility, was 377,750, up 2,000 from the week before and the fifth straight increase.

The report suggests the September jobs report, due on Oct. 5, will show little improvement.

At the same time, the so-called Philly Fed Index, issued by the Federal Reserve Bank of Philadelphia, neared the break-even level for the first time in six months. The index measures business conditions in Pennsylvania, New Jersey, Maryland and Delaware. The index overall was at -1.9 in September, up from -6.9 in August. In other words: better but hardly great.

Helping the index was a rise in new orders to 1.0 from -5.5. And, a possible signal of things ahead, inventories declined sharply to -21.7 from -6.9. The survey's future indicators rose to 41.2 from 12.5, the highest level since January.

Continued weakness in China and Europe
China's manufacturing activity contracted in September for the 11th straight month. The preliminary HSBC China Manufacturing Purchasing Managers Index rose slightly to 47.8 in September from a final reading of 47.6 in August. A reading below 50 suggests China's economy is stll contracting, but it is showing signs of stabilization.

Chinese stocks stumbled to their lowest level since February 2009 to lead Asian markets lower after the data. It didn't help that Japan's trade deficit widened in August from a month earlier as both exports and imports fell. Japan's data, however, was above expectations.

Private-sector activity also contracted in the eurozone. The Markit September PMI index fell to 45.9 from 46.3 in August, below forecasts for 46.7 and the steepest contraction since June 2009, despite some positive signals recently out of Germany, the region's largest economy.

The biggest concern was an accelerated rate of loss of new business -- the largest monthly fall since May 2009.

J.C. Penney gets socked

Sixteen of the 30 Dow stocks were ahead on the day, led by Kraft Foods (KFT), up 76 cents to $41.60. Kraft leaves the Dow after Friday's close, to be replaced by UnitedHealth Group (UNH).

Microsoft (MSFT), Chevron (CVX) and Exxon Mobil (XOM) were the second-, third- and fourth-best Dow performers.  (Microsoft publishes MSN Money.)

Wal-Mart Stores (WMT) was a winner, up 38 cents to $74.74. The retail giant said it would discontinue sales of Amazon.com's (AMZN) Kindle family of products. Amazon shares were down 87 cents to $260.81.

Meanwhile, 203 S&P 500 stocks were higher, led by Conagra and discount retailer Dollar Tree (DLTR). J.C. Penney (JCP) and Bed Bath & Beyond were the laggards.

J.C. Penney was off $3.26 to $25.83 after the department store chain told analysts it expects its financial struggles to continue during the second half of the year.

Dollar Tree and Adobe Systems (ADBE) were the Nasdaq-100 leaders. Forty-eight stocks in the index were higher. Bed Bath & Beyond and Green Mountain Coffee Roasters (GMCR) were the laggards.

The latter was off $2.97 to $27.84 after Starbucks (SBUX) priced its new Verismo single-cup coffee maker near where Green Mountain sells its Keurig maker. Starbucks was up $1.08 to $51.19.

Short hits from the markets -- New York close (Updated)
			Thur.			Wed.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.1000%			0.110%			11.11%			900.00%
5-year Treasury note			0.693%			0.689%			16.28%			-16.51%
10-year Treasury note			1.777%			1.782%			13.76%			-5.02%
30-year Treasury bond			3.032%			3.032%			12.97%			4.95%
Currencies
U.S. Dollar Index			79.478			79.127			-2.14%			-1.30%
British pound			1.6223			1.6228			2.11%			4.41%
(in U.S. $)
U.S. $ in pounds			£0.616			£0.616			-2.07%			-4.23%
Euro in dollars			$1.30			$1.30			3.02%			0.16%
(in U.S. $)
U.S. $ in euros			€ 0.771			€ 0.766			-2.93%			-0.16%
U.S. $ in yen			78.43			78.37			-0.08%			1.73%
U.S. $ in Chinese			6.32			6.31			-0.62%			-0.03%
yuan
Canada dollar			$1.025			$1.026			1.03%			4.45%
(in U.S. $)
U.S. dollar			$0.977			$0.974			-1.02%			-4.26%
(in Canadian $)
Commodities
Gold (-GC)			$1,770.20			$1,771.70			4.89%			12.98%
(per troy ounce)
Copper (-HG)			$3.759			$3.814			8.74%			9.40%
(per pound)
Silver (-SI)			$34.6820			$34.5880			10.30%			24.24%
(per troy ounce)
Wheat (-ZW)			$8.7950			$8.8150			-1.12%			34.74%
(per bushel)
Corn (-ZC)			$7.4600			$7.565			-6.72%			15.39%
(per bushel)
Cotton			$0.7522			0.7641			-2.64%			-17.95%
(per pound)
Coffee			$1.6860			1.744			2.34%			-26.58%
(per pound)
Crude oil (-CL)			$92.42			$92.30			-4.20%			-6.49%
(per barrel)