Stocks waver on jobs data, Libya unrest

First-time unemployment claims drop. Oil tops $100 as Mideast violence threatens production. Foreign stocks fall more than 1%. New-home sales slip more than expected.

By TheStreet Staff Feb 24, 2011 8:37AM

Image: Wall Street sign (© Comstock Images/age fotostock)TheStreetBy Melinda Peer, TheStreet

 

Updated at 1:10 p.m. ET

 

Stocks were lower as a better-than-expected reading on jobless claims was overshadowed by continued fears that climbing oil prices caused by the conflict in Libya could derail the economic recovery.

 

At 1:10 p.m., the Dow Jones Industrial Average ($INDU) was down 67.5 points, or 0.5%, at 12,038. The S&P 500 ($INX) was down 6.5 points, or 0.5%, at 1,300 and the Nasdaq ($COMPX) was down up 0.3 points, or 0.01%, at 2,723.

 

Oil is again trading above $100 as violence in the Libyan capital, Tripoli, creates concerns about continued production disruptions in the North African country. Libya has the biggest oil reserves in Africa, and although it is only the world's 15th-largest exporter, investors fear that political unrest could spread to major oil producers such as Iran or Saudi Arabia. Crude oil for April delivery was trading $1.14 higher at $99.24 a barrel and has reached a high of $103.41 today.

The Energy Information Agency said crude oil inventories rose by 822,000 barrels in the week ended Feb. 18, which was lower than the increase of 1.4 million barrels that analysts had expected, according to a Platts survey.

 

Late Wednesday, the American Petroleum Institute said oil supplies gained 163,000 barrels.

 

The number of first-time jobless claims fell by 22,000 to 391,000 during the week ended Feb. 19, less than the 410,000 economists had expected. That's down from 413,000 in the previous week, the Labor Department said.

 

Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors said the 4-week moving average, which shed 16,500 to 402,000 in the week ended Feb. 19, is also a positive development since “it closes in on the sub-400,000 level not seen since July 2008.”

 

”When we look to current risks to the economy, the unrest in the Middle East and rising oil prices are high on the list, although oil prices would still need to move much higher from current levels to be a serious threat,” Baird said. “With companies still resisting any expansive hiring, the long road back to full employment is another underlying risk to sustained growth.”

 

The Commerce Department said durable goods orders rose 2.7% in January, as expected. December's decline was revised to 0.4% from the previously reported 2.5%. Excluding transportation, orders dropped 3.6%, compared with estimates of a 0.6% gain.

 

Housing data, however, was disappointing. New-home sales fell 12.6% to 284,000 in January, missing expectations for a decline to 310,000 from December's previously reported level of 329,000, according to Briefing.com.

 

The Federal Housing Finance Agency’s housing price index dipped 0.3% in December, after remaining unchanged in the prior month.

 

There were 249 million shares trading on the New York Stock Exchange, 57% of which were rising while 39% were losing ground. On the Nasdaq, 485 million shares changed hands.

 

Toyota (TM) is voluntarily recalling 2.2 million Toyota and Lexus vehicles sold in the U.S. because of unintended acceleration issues requiring a fix to carpet and floor mats that can shift and interfere with the gas pedal. The stock was rising 0.1% at $90.32.

 

In company news, shares of Priceline.com (PCLN) were advancing 7.7% to $459.16 after the online travel company reported better-than-expected earnings on stronger bookings late Wednesday.

 

E-Trade Financial's (ETFC) stock was off by 5.8% at $15.68 after the online broker said major shareholder Citadel Investment Group plans to sell nearly 24 million of its common shares in a secondary offering.

 

General Motors (GM) posted an adjusted profit of 52 cents a share for its most recent quarter, beating estimates of 46 cents. Sales of $36.9 billion beat a $33 billion target. The stock was off by 5.1% at $32.82.

 

Sears Holdings (SHLD) named Lou D'Ambrosio as CEO and president. The retailer reported a fourth-quarter profit that topped estimates even though U.S. same-store sales fell 1.2%. The shares were losing 5.1% to $82.70

The April gold contract was rising by 2 cents at $1,414.20 an ounce.

 

The benchmark 10-year Treasury up by 9/32, diluting the yield to 3.450%. The dollar was weakening against a basket of six currencies, with the dollar index down by 0.3%.

 

Hong Kong's Hang Seng lost 1.3%, and Japan's Nikkei dropped 1.2%. London's FTSE was shedding 0.5%, and the DAX in Frankfurt was off by 0.9%.

 

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172Comments
Feb 24, 2011 2:40PM
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Lets exert our power and walk away from all of the mortgages and be done with it. Do you think that this will cause some of the rich folks poor?

 

Usually it takes three years before you become eligible for a new loan so in three years we buy again if we are feeling lucky.

Feb 24, 2011 2:36PM
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Plenty of blame to go around...  but the deciding factor is the government incentives to gamble...   The government deserves MOST of the blame for talking the Little guy into buying something he could not afford...
Mirage:

Don't forget about Janet Reno and Barney Franks threatening banks that if they didn't write more mortgages for certain groups (regardless of credit risk) that the government would investigate these banks for lending violations.

Now, many of the people in these "protected groups" who should have been renters, lost their homes and more and some find themselves out on the street because now they can't even afford to rent.

See what happens when government, even with good intentions, wrongfully gets involved in influencing decisions that it should not be.  

It is a good things for government to tell lenders that they can't deny a person a loan based on race, ethnicity or religion etc.  However, it is a bad thing when government says to lenders and you'd better make ___% of your loans to certain groups or else we will investigate you.  This just led to bad/risky loans and then the packaging of these loans into derivative instruments so that the loan originator could sell the risky packaged loans on the market.       

Feb 24, 2011 2:33PM
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lol....Deklen, who is crying....not me...

 

I may not be in the top 1%, but I am in the top 5%.  The nice thing is since I own the company and am its sole stock holder, I can decide to pay myself whatever I want.   I assure you I will take home theexact same amount regardless...

 

You socialists cannot run a damn thing.  You destory.  Capitalists build.   Regulate and tax away.  I will just layoff and reduce pay to pay for government.  Government taking more from me just means LESS for you.  I know you redistributionists would like to take everything and give it away...  but once you do that there will be no more...

 

If you don't like your employer or you pay, START your own business....Or are you too lazy or stupid to do so?   Or are you just a Donkey that whines all the time?

Feb 24, 2011 2:26PM
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Colorado:

I don't always agree with you, but I do regarding the influence of financial institutions.  There is a good book, don't have the name off the top of my head, that addresses the lifecycle of a national economy.  The last part of the cycle is the rise and influence of banks/financial institutions.

Essentially after an economy has passed through the cycle of industrialization and manufacturing, it moves into services and then banking and financial institutions.

The big players 40, 50, 60, 70 years ago were U.S. steel, Ford, GM etc.   Today, the news generators are G.S., J.P. Morgan and Wall Street. 

The Fed is seen as the biggest influence on the economy, not our manufacturing.  Because the Fed and banks control, the money supply, they have enormous influence on the economy. 

Because of this, we have seen ever increasing bubbles in various sectors, such as the dot.com/tech bubble in the 90s, housing in 2000s.  Financial institutions, with the control of lending, which has become necessary to prop up our weak economy over the past 20+ years, dictate where the flow of capital/borrowed money will flow. 

Government and Fed polices, which influenced and encouraged financial institution greed led to a major misallocation of capital into the real estate market leading to a bubble and collapse.

Unfortunately, once a nation enters this cycle, its course is pretty much set.   
Feb 24, 2011 2:24PM
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2Sick:  So why were you in support of the tax cuts for the highest earners if a wealth shift is such an issue.

By the way.. the shifting of wealth is due to the investment markets.  It happens in every recession.  Those with savings can invest while things are on sale and people who can't are stuck trying to scrape out an existence on the scraps.  It's why I like a progressive tax that gives them a pass on paying taxes.  The free market guides wealth to the wealthiest that can exploit it.  Adam Smith saw that, and that's why he liked progressive taxation too.
Feb 24, 2011 2:20PM
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roll back the clock to our founding father's day and the rich were protected just like today and also had a strong voice.  perhaps stronger.  it's just that back then the common man didn't have it in his face every day.  back then after HE built his house, he was basically done.  hunt a deer, done.  have a wife, kids, farm some food.  today we're so much more of a pay-every-month society.  and who do we pay to?  various megacorporations with 15 million CEO's.  cable-cell phone-etc.  add up your bills and see where you send your money.  and ask if that money stream ends when you retire? 

 

Our country was founded upon the principles of equal justice under the law.  It was NOT founded on social justice, or popular justice, or feel-good justice or justice of convenience, or justice of selective application.  When the laws of the land are not applied equally to the citizens of the land, chaos will ensue. 
Feb 24, 2011 2:18PM
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No, for the housing mess here how the blame sould be apportioned...

 

1. Little Guy, he gambled, betting with 3% down.  He lost.  He had no business gambling.  Even with 20% down he was still allowing the bank tocover 80% of his bad bet.

 

2..The Government, they provided incentives to gamble.  1st 500K in real estate profits tax free, mortgage interest deductiblity, allowing the banks to sell the loans they made so they could reloan the money over and over to allow more people to gamble.

 

3. The banks for not caring about credit quality at all, because the Freddie and Fannie would hold the loans, or worse selling them to unsuspecting groups via bonds with triple A ratings...

 

Plenty of blame to go around...  but the deciding factor is the government incentives to gamble...   The government deserves MOST of the blame for talking the Little guy into buying something he could not afford...

 

This is what happens when the government interferes in the free market...  no matter how well intentioned...

Feb 24, 2011 2:09PM
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Well Jarlax, maybe had Clinton done something in response to Bin Laden's FIRST attempt to bring the Trade Towers down (or did you forget the truck bombing of them)...

 

Certainly his weak response only taught NBin Laden, next time with more explosives...  And we all saw how Clinton went after him...  So certainly much of 9/11's blame falls on Clinton...

 

I suggest you read the 9/11 commissions report... 

 

Feb 24, 2011 2:08PM
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dharm - i'm doing well.  Portfolio took a beating the past week but what the heck.  Life is good.  Later.
Feb 24, 2011 2:05PM
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I thought we didn't want further debt? What reduction in the deficit/debt occured under Reagan? Do we really want to pick a couple more fights with foreign countries? Have we not done enoughh damage? - I wonder how long it will be until someone we trained in Iraq plots and attack on the US....
jar:

I know I'm not going to convince you, but Reagan really did try to cut spending.  However, with our system, one branch of government can't get it done.  Reagan wanted to increase defense spending and try and offset this with cuts in other government programs.  He was not able to get Congress to go along with this, including some in his own party.   Of course, he couldn't get the dems to go along with cuts and so we got what we have gotten for the past 40 years, debt.  

It is unfair to blame a president alone, unless that president proposes budgets up front with huge deficits and the president shows himself to be the type that desires to increase the size and scope of government.  

Reagan failed to accomplish his goal of budget cutting and this was not good.  However, more recent presidents don't even pretend to try and cut deficits, they want to increase them.      

Feb 24, 2011 1:59PM
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2 sick, they call Goldman Sachs Government Sachs for a good reason. They dictate what happens period. They need money they get tax payer money period, look at Bush's stimulus package---the story goes that government sachs needed 13 billion by the next monday this being on friday when AIG was going to fail. They go to the government and say we need it period, all the strings were pulled and government sachs was given 13 billion in 2 days time, saturday and sunday--stunning.. Banks rule this universe as well as big oil and all major corporations
Feb 24, 2011 1:59PM
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didnt reagan arm afghanistan to the teeth because we were all so so scared of the ruskies for some reason? hows that workin out now?
Wait a minute now... we all know that 9/11 was Clinton's fault...
Feb 24, 2011 1:55PM
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TURKEY- And if that home sold originally in 2006, it very well might have had a sales price between the upper $300Ms and lower $400Ms.  The phrase a Phoenix appraiser used to me on a seemingly similar property there about 18 months ago was "RES RE values are in freefall".

 

The replacement / build out / cost value of that home even now, could be in the upper $200Ms.  With the excessive pre-built inventory there, it's a buyer's market   A highly qualified buyer with a good down payment and good income should be able to pick and choose.  Happy hunting!   

Feb 24, 2011 1:55PM
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I hope the market falls straight out the bottom! Thats what it takes in this country for  middle and lower class to afford anything. The country has priced itself right out of business and its too stupid to recognize it.
Feb 24, 2011 1:53PM
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Your home is typically not considered a investment, in the real estate investing world.  To make money, you need investment property.  Purchased right, and held, it offers the best investment.  Killing inflation and rewarding the investor.  The numbers have to work, particularly cash flow.  Rent needs to cover all expenses, and there are many.  In this case, someone is paying off the the home, hopefully providing modest income and it is going up in value.  This is not rocket science, but it requires making a prudent purchase.  I recently refinanced several of my properties for 3.88% lock for 5 years.  I have one I owe 150K on.  I bought for 190K, 20% down (equity from another property, refinance), I  spent 60K(out of pocket) on a complete remodel and it appraises for 365K.  WIth the new refiance, my mortgage is $910.00, $200.00 of that goes directly to  principal.  Rent is $1350.00.  Netting me $440.00  per month income.  Over the course of my 5 year loan, renters will bring in $26,400 income to me, pay the mortgage and reduce my principal balance by $12,000.  Grossing me $38,400 in 5 years.  A 26% return in 5 years, or 5.2% percent a year.  Meanwhile I write of all upkeep, mortgage interest and depreciate the property on my taxes, and hopefully the housing market will recover and go up in value.  Now imagine if you have several of these?  Is this a good investment?  I'll say.

Hey Livin.  I hope you are well?  I am heading out the door.  I will catch you later.
Feb 24, 2011 1:52PM
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It'll be curious to see how Palin and Bachman will react to the news that Obama announced the administration would no longer defend the DOMA.  As Tea Party spokespeople, they should be very happy since they want less government.  Here's less government for them, not wasting taxpayer dollars supporting this bill. 

Of course, this does start a dangerous precedent of a President determining the constitutionality of a law unilaterally despite the Supreme Court twice rejected the claim that it was unconstitutional.  It does open the door for a Republican president to turn around and say that they will no longer defend the Health Care Act because they don't like it.  A conundrum, indeed.
Feb 24, 2011 1:49PM
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It seems that every time we turn around, someone is always there, defending the indefensible.  What a sad condition our Union is in because there is no more right and wrong anymore, just endless shades of gray.  How in the world can we expect equal justice to be carried out when the lines between legal and illegal, right and wrong are constantly, infinitely and intentionally blurred? Our country was founded upon the principles of equal justice under the law.  It was NOT founded on social justice, or popular justice, or feel-good justice or justice of convenience, or justice of selective application.  When the laws of the land are not applied equally to the citizens of the land, chaos will ensue.  Ladies and gentlemen, it appears that our traditions and our morals and values have gone the way of the dodo bird, and our country can't be far behind.
Feb 24, 2011 1:42PM
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2 Sick,Correct me if I'm wrong if someone is kicked out of his house(foreclosed on) his credit rating suffers for 7 years? Who ever gets the underwatered mortagage will take the hit along with foreclosed upons' neighbor.
Feb 24, 2011 1:39PM
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Oha / TAZ- To be fair, 2-sick said it first here.  If I ever feel the need to slink off somewhere and lick my wounds (Ach!  Hairball!), I won't be coming back under another screen name (to paraphrase a really old Steve Martin bit "one last post and then Goodbye!")

 

And in prior posts, I've discussed that any increase in home values significantly in excess of inflation is usually unsustainable.  Look at the Phoenix, Vegas, most of Florida areas, for instance.  Owners relied on the greater fool theory to flip these homes for $.

 

We previously saw 20% + increases in home values in these areas   The bad news is those increased values were never there and might not be coming back for  a long time, if ever.  Not surprisingly, another really hard hit area of RES RE is the second home / condo market (CO, MT, UT, etc.) 

 

In the giant cluster *f**k that the housing market has become, the greater fool is gone now.  SteveG, with that "ideal" location, could be the exception to the rule.  I hope for his sake he is, but we'll see.  You folks be safe out there. 

Feb 24, 2011 1:36PM
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The big too do about 100.00 oil. Our government welcomes 100.00 oil and the political drama that comes with high oil prices.  Since the 1970's  all we hear is we promise , we promise, we promise an energy policy- that will entail alternatives and were does it get us.  Back on big oil,  I believe.....we will be getting off of big expense oil when the supply of oil finally runs out......  Hang onto your wallets this rise is starting to hurt at the local pump now.......
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