Telecoms, retailers weigh on market

The Dow falls 26 ahead of Friday's jobs report. Target's and Macy's December sales are disappointing. AT&T and Verizon pull the Dow lower. Nvidia soars. A rising dollar hits oil.

By Charley Blaine Jan 6, 2011 1:27PM
Charley BlaineUpdated: 7:10 p.m. ET

Stocks were mostly lower today as a rising dollar pushed commodity prices and energy and gold stocks down and a number of retailers reported disappointing December sales.

Telecom stocks were also weak. Technology shares were mostly higher.

The dollar's gains pushed oil below $89 a barrel, and gold moved down slightly.
The Dow Jones industrials ($INDU) closed down 26 points to 11,697. The blue chips had been down as much as 55 points. The Standard & Poor's 500 Index ($INX) was off 3 points to 1,274. But the Nasdaq Composite Index ($COMPX) was up 8 points to 2,710.

Also keeping markets in check was the fact that many investors didn't want to make big bets ahead of Friday's jobs and unemployment report from the Labor Department. The report is due before the market open. Futures trading suggests a modestly lower open.

Going into Friday, the Dow is up 1% for the first week of the year, with the S&P 500 up 1.3% and the Nasdaq up 2.2%. If the gains hold, the Dow and S&P 500 will be up for six straight weeks, with the Nasdaq up six of seven weeks.

Crude oil settled at $88.38 a barrel, down $1.92 from Wednesday. Gold settled down $2 to $1,371.70 an ounce. Crude is down 3.3% this week, with gold off 3.4%.

But AAA's Fuel Gauge Report showed gasoline averaging $3.079 a barrel today, up slightly from Wednesday and 0.2% higher this week.

Interest rates were lower, with the 10-year Treasury yield falling to 3.419% from 3.483% on Wednesday.

The dollar was higher against major currencies. The value of the euro briefly dropped under $1.30.

Energy prices -- New York close
 

Thur.

Wed.

Month chg.

YTD chg.
Crude oil 

$88.38

$90.30

-3.28%

-3.28%
(per barrel)











Heating oil

$2.5112

$2.5422

-1.28%

-1.28%
(per gallon)











Natural gas 

$4.4340

$4.4730

0.66%

0.66%
(per mil. BTU)











Unleaded gasoline

$2.4430

$2.4451

-0.42%

-0.42%
(per gallon)











Retail gasoline

$3.0790

$3.0770

0.23%

0.23%
(per gallon; AAA)












Holidays may not have been that joyful
The surprise of the day was that retailers' December sales were not uniformly robust. Earlier estimates had suggested that holiday sales were the best since 2007. But the results either missed estimates or simply fell.

There also appeared to be a division between retailers catering to affluent consumers and those who targeted lower-income consumers. Nordstrom (JWN) reported an 8.4% same-store sales increase. Target (TGT) sales were up just 0.9%; analysts had expected a 3.9% gain.

Target's gains in apparel and groceries were offset by electronics, toys and some home categories, the company said. 

Nordstrom shares were up 0.2% to $42.94, while Target was off 6.8% to $54.93, third-worst among S&P 500 stocks.

Gap (GPS), down 6.9% to $20.70, was the second-worst S&P 500 performer, after the company reported an 8% decline in same-store sales. Analysts had expected a 2.4% gain.

The Standard & Poor's Retail Index ($RLX) was off 8 points, or 1.6%, to 501. 

Macy's (M) shares were off 4% to $23.97. Same-store sales were up 3.9%, compared with the Street estimate of 4.5%.

But TJX Companies (TJX) shares jumped 5.9% to $45.52, and Ross Stores (ROST) rose 1.8% to $63.77. TJX reported a 2% increase in sales, compared with expectations for a 2.8% decline. Ross sales climbed 4% from a year ago, compared with the 0.7% decline that analysts had expected.

Estimates rise on job gains
A number of economists were rapidly boosting their estimates of nonfarm payroll gains after the ADP National Employment Report suggested 297,000 new jobs were created in December.

Bloomberg News said the average estimate is now for a gain of 150,000 jobs in the Labor Department's report.

That's up from 135,000 before the ADP report came out Wednesday. The report was another bit of evidence of a broadening recovery. The Institute of Supply Management's nonfactory index on Wednesday showed service industries expanded in December at the fastest pace since 2006.

Ahead of the jobs report, the Labor Department said jobless claims increased in the latest week to a seasonally adjusted 409,000. But the four-week average of 410,750 was the lowest since late July 2008. Economists like to use a four-week average to smooth out week-to-week volatility.

UBS Financial Services raised its estimate from 125,000 to 160,000. Goldman Sachs and JPMorgan Chase held their estimates. Goldman said seasonal factors may have distorted the ADP estimate.

The Liscio Report thinks the gains will be closer to 130,000, with the unemployment rate at 9.7%. Polling firm Gallup does its own unemployment measure, without any seasonal adjustments. It sees unemployment at 9.8% at the end of December up from 8.8% at the end of November.

Debt warning startles market
The market briefly looked like it might slump badly after the government warned that the federal debt limit could be reached as early as March 31. The Dow quickly dropped to as low as 11,667 before clawing higher.

Treasury Secretary Timothy Geithner warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences "potentially much more harmful than the effects of the financial crisis of 2008 and 2009."

The warning, in a letter to Senate Majority Leader Harry Reid, D-Nev., may well be the start of intense wrangling over how to deal with government finances, although there were signals from new House Speaker John Boehner that Republicans would work constructively on the issue.

Weakness in telecoms weighs on market
Only nine of the 30 Dow stocks were higher today.

The weak links were AT&T (T), off 1.4% to $29.15, and Verizon Communications (VZ), down 2.6% to $36.23.

Their weakness was due in part to a slump in shares of MetroPCS (PCS). Shares dropped 6.7% to $13.30, the fourth-worst performer among S&P 500 stocks, after fourth-quarter subscriber growth of 298,000 was less than expected. Piper Jaffray had been looking for 450,000 additions.

Boeing (BA) was up 2% to $68.80. The aerospace giant reported deliveries of 462 airliners in 2010, better than the expected 460. The company also sold more than three times as many planes in 2010 as the year before as air-travel demand recovered from the global economic crisis.

The Dow leader was Microsoft (MSFT), up 2.9% to $28.82 on investor excitement over the company's announcement that the Windows personal-computer operating system will run on low-power, mobile-device chips called ARM processors made by Nvidia  (NVDA), Qualcomm (QCOM) and Texas Instruments (TXN). (Microsoft publishes MSN Money.)

ARM processors are designed by the British company ARM Holdings (ARMH). ARM was down 0.5% to $21.78.

Nvidia led the S&P 500 and Nasdaq-100 ($NDX.X), finishing up 13.8% to $19.33.

Fifty-four Nasdaq-100 stocks were higher; the index was up 4 points to 2,278. Apple (AAPL) was flat at $334.02 after hitting a new high of $335.25.

Energy shares move lower
Chevron (CVX) was down 0.9% to $90.65 as crude oil moved lower. Schlumberger (SLB) was off 2.5% to $80.53.

BP (BP) was off 0.6% to $46.23 in New York as investors bet that a new presidential panel report that spreads the blame for the country's worst-ever oil spill means the companies will avoid a very costly gross-negligence charge.

Halliburton (HAL) was off 3% to $38.22; but Transocean (RIG), which owned the Deepwater Horizon rig that exploded in April, was down 0.3%to $73.04.

Freeport-McMoRan Copper & Gold (FCX) was off 1.9% to $116.09 on the gold decline and a fall today in the price of copper.

Short hits from the markets -- New York close
 
  Thur.     Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.140%

0.140%

16.67%

16.67%
5-year Treasury note 

2.083%

2.158%

3.32%

3.32%
10-year Treasury note

3.419%

3.483%

3.45%

3.45%
30-year Treasury bond

4.534%

4.551%

3.94%

3.94%
Currencies











U.S. Dollar Index

81.093

80.538

2.28%

2.28%
British pound

$1.5477

$1.5511

-0.82%

-0.82%
(in U.S. $)











U.S. $ in pounds

£0.646

£0.645

0.83%

0.83%
Euro in dollars

$1.302

$1.315

-2.69%

-2.69%
(in U.S. $)











U.S. $ in euros

€ 0.768

€ 0.760

2.77%

2.77%
U.S. $ in yen 

83.542

83.200

2.67%

2.67%
U.S. $ in Chinese

6.649

6.615

0.52%

0.52%
yuan











Canada dollar

$1.005

$1.004

0.11%

0.11%
(in U.S. $)











U.S. dollar 

$0.996

$0.996

-0.11%

-0.11%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,371.70

$1,373.70

-3.38%

-3.38%
(per troy ounce)

 

 





Copper

$4.33

$4.41

-2.64%

-2.64%
(per pound)











Silver

$29.126

$29.20

-5.95%

-5.95%
(per troy ounce)











Wheat 

$7.8900

$8.0825

-0.66%

-0.66%
(per bushel)











Corn

$6.0200

$6.1925

-4.29%

-4.29%
(per bushel)











Crude oil 

$88.38

$90.30

-3.28%

-3.28%
(per barrel)












18Comments
Jan 6, 2011 5:47PM
avatar

target has gotten very competitve on pricing and I usually shop there over Walmart.  I was in both stores on Christmas Eve and also the weekend before and didn't have to wait more than 10 minutes in the check out lines and that was with Walmart having its traditional 10 out 36 checkouts open.  The stores were busy but not packed.   A lot of the good news was media hype to try and get the consumer to buy.  The warning that gasoline prices were going to reach $4.00 this spring killed a lot of spending.

 

For those that did have sales increases I would be willing to bet that after the deep discounting that went on there was little profit to be made. 

Jan 8, 2011 8:50PM
avatar
Is'nt Target qwned by the French?  Subed by the French ?
Jan 7, 2011 2:53PM
avatar
hows the crooks on wall street today  i see not so good   all that crap about the economy getting better is surfacing  stores closingSHAWS)  people losing jobs  ****.S    not so good ey... just the beginning   we will see a bigger crash very soon...take your money out of the market  your gonna lose it all if you dont..  greed will get you nowhere!!!!
Jan 6, 2011 11:32PM
avatar
Oh yea.  Ignatius is definately feeling the "Hope" and "Change."  Now if he could just work on his language skills.   Never mind - he probably voted for Obama.  This is probably the best he can do!!!
Jan 6, 2011 7:24PM
avatar
[The market briefly looked like it might slump badly after the government warned that the debt limitcould be reached as early as March 31]. why would wall street banks and traders worry about the deficit - they are not the ones that will pay for it. as usual, the people will pick up the tab while the fat cats roll in the gravy. ain't America great !
Jan 6, 2011 7:16PM
avatar

My gift giving was way down. Both my wife and I work plus she gets child support. We are a two and a half income family and we are working on getting out of debt. Kind of like the government should be doing.

 

It doesn't matter how much it cost when it's paid off.

 

 

Jan 6, 2011 6:06PM
avatar
News Flash - The Consumer Has Left The Building.
Jan 6, 2011 5:38PM
avatar
yeah should have elected that old fart and his dimwitted sidekick.
Jan 6, 2011 5:21PM
avatar
So after two years ...how is this "Hope" and "Change you can beileve in" working out FOR YOU?
Jan 6, 2011 4:59PM
avatar
I heard on the radio a few days ago that holiday sales were way up from last year.
Jan 6, 2011 4:58PM
avatar
What am I supposed to make of all of this?
Jan 6, 2011 4:57PM
avatar
Who shops at Target and Macys anyway? They are way over priced and their sales were low before the holidays!
Jan 6, 2011 4:50PM
avatar

 I share the disbelief of others...We were just being told not 2 weeks ago that all was well and retail was "booming". I was in those stores and there was no "boom". People were buying the "deals" and then going home. Perhaps the so-called "experts" should get out of their offices once in a while! Or learn how to tell the difference between "gross and net margins!"

 As for a double dip...maybe. With oil prices heading up...heating oil in this neck of the woods is $3.59....it becomes a BIG drag on the economy. If heating oil and gas go to $4 ... look out! And the Fed is HOPING for some inflation...I'd be carefull what you wish for....

Jan 6, 2011 3:59PM
avatar
How do we go from the media hype two weeks ago of increased holiday spending, to seeing the reality today of disappointing holiday sales? Time to batten down the hatches for the double - dip. Due to the lack of work here at my compnay, I laid off two more employees today. Not happy about it, but if we have no customers, we have no work.
Jan 6, 2011 3:51PM
avatar
so what happened with all the hype news media reports the past 2 months telling everyone holiday spending was  impressively increasing?
avatar
i swear i read a article just recently that sales were up and looking better....i don't think tehy know WTF there report on.

also as far as at&t and verizon, when you can go get wlmart plan and the newer non contract plans for a fraction of the cost..your gonna lose out.

I'm paying roughly $160 for a family plan with 3 people...i just looked into it ans i can get a unlimited everything from walmart straight talk for $45 month each person.. half the price of verizon. or virigin mobile unlimited txt,internet and 300 minutes for $25 a month

i'm switching!! gonna save thousands a year. Goodbye verizon!

Jan 6, 2011 3:00PM
avatar
Treasury Secretary Timothy Geithner warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences "potentially much more harmful than the effects of the financial crisis of 2008 and 2009."
repeal of oboomacare should greatly reduce the need of raising the debt ceiling amongst other socialist programs! it's time for the lazy bums to get off their deklens and do something!
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