Stocks extend losses after jobless claims tick higher
Applications for unemployment insurance rise unexpectedly. Sales of new homes climb. Weak economic reports out of Europe and China overshadow hopes for more Fed stimulus. HP's shares slip after its revenue misses forecasts.
Updated 11:55 a.m. ET
Stocks fell Thursday after applications for U.S. jobless claims unexpectedly ticked up last week. Also, disappointing economic data out of China and Europe pointed to stalling global growth, while hopes of a swift stimulus action by the Federal Reserve dimmed. Hewlett-Packard's (HPQ) shares plunged after the company missed revenue estimates Wednesday.
The Dow Jones Industrial Average ($INDU) was down 86 points at 13,087. The S&P 500 ($INX) was down 7 points at 1,406. The Nasdaq Composite ($COMPX) was down 12 points at 3,061.
Applications for U.S. jobless benefits rose slightly last week, the Labor Department reported Thursday. Initial jobless claims increased by 4,000 to a seasonally adjusted 372,000 in the week ended Aug. 18. That's the highest level in five weeks and above the 365,000 level economists had expected, according to Briefing.com. The Labor Department revised the prior week's number to 368,000 from 366,000.
U.S. factory activity edged up to 51.9 in August from 51.3 in July, the first monthly increase in five months, according to Markit's flash manufacturing Purchasing Managers Index.
Housing data not enough to boost stocks
Sales of new single-family homes climbed by 3.6% to an annual rate of 372,000 in July from 359,000 in June, the Commerce Department said Thursday, surpassing economists' estimates of 368,000, according to Briefing.com. The Department also revised June sales up from an original reading of 350,000. The July increase is the third in four months.
Prices of new homes, however, fell 2.1% in July from the previous month to a median price of $224,200 as the inventory of new homes on the market fell 0.7% to a record low of 142,000 in July. At July's sales pace, it would take 4.6 months to clear the houses from the market, down from 4.8 months in June.
Fed minutes provide hope
Wednesday afternoon, the Federal Reserve released the minutes from its latest Federal Open Market Committee meeting. The minutes showed readiness among many policymakers to further boost stimulus -- possibly by another round of bond buying -- unless they see "substantial" signs the economy is poised to rebound.
U.S. stocks trimmed losses Wednesday after the minutes to close mixed. While gold rose to a 16-week high, the dollar fell to a two-month low. The euro rose to a seven-week high against the dollar. Oil also rose on stimulus hopes.
On Thursday, however, investors hopes for a swift action dimmed somewhat after certain Fed members pointed to improving U.S. economic data recently.
Fed Chairman Ben Bernanke is set to speak at a symposium in Jackson Hole, Wyo., on Aug. 31. Many economists expect Bernanke to announced stimulus then, or at least provide even more clarification.
Data out of China and Europe cause concern
China's manufacturing may contract at a faster pace in August to the weakest level since November, according to a preliminary reading released by HSBC, signaling more monetary and fiscal stimulus may be needed to secure a second-half growth rebound.
A preliminary composite purchasing managers' index showing private-sector business activity in the eurozone contracted for a seventh consecutive month in August. While the August figures show a slight improvement, together the recent readings point to a contraction in GDP in the eurozone.
St. Louis Federal Reserve President James Bullard, in a CNBC interview Thursday, voiced his skepticism over the outlook for the eurozone and warned that the best hope might be for the region to just "muddle through" its sovereign debt crisis.
Greece problems still loom overhead
Meetings over the next few days involving German Chancellor Angela Merkel and French President Francois Hollande are also in the headlines. The two leaders are expected to present a united front, telling Greek Prime Minister Antonis Samaras not to expect any leeway on its bailout agreement unless it sticks to its terms.
Stocks to watch
Dow component Hewlett-Packard's (HPQ) shares slipped after the computer maker reported better-than-expected adjusted earnings but missed on revenue. Deutsche Bank analysts slashed their price target to $15 a share from $20 and reiterated their "sell" rating.
Big Lots (BIG) shares plunged Thursday after the retailer reported declining profits that also missed analyst expectations on higher costs and a loss at its Canadian operations. The retailer also cut its full-year adjusted earnings forecast.
Shares of steel companies AK Steel (AKS), Steel Dynamics (STLD), Nucor (NUE) and U.S. Steel (X), among others, dropped after Dahlman Rose downgraded the sector because analysts believe steel prices are at their peek.
- More analyst call here.
General Motors' (GM) German unit, Opel, agreed with labor representatives to cut the hours of several thousand workers at two of its four German plants in response to a drop in demand for cars in Europe, Reuters reported. GM lost $747 million on its European operations last year.
I quote one of the best comment ever written:
"GO GREEN...!...RECYCLE OBAMA AND THE SENATE..."
I will add one of my comments:
WE LOST THE RESPECT ABOUT MAKING A PROFIT
Because they can't undermine America as well as they can by pumping i-Phones. All i-Phones sell for the same price regardless of where they are sold. The difference is a little retail trick called Loss Leader. Regardless of who you buy the phone from, you need service to use it. Most cell giants are requiring 2-year plan because they get you to buy the phone for less than they paid for it and make it up in the service plan (like adding data pack charges). Wal-Mart is just a platform pariah, they do America no good. If you buy the phone from them and opt for the in-store service, know that it only rents bandwidth from the others. The provider gets priority coverage, you won't. Further, if it needs repair, don't go back to Wal-Mart. Don't go to a service provider either. You are thinking correctly. What we really need is to stick Wal-Mart with warehouses full of knock-offs and cheap reproduction items from overseas and focus completely on restoring economy HERE. I don't mind paying more and never stepping in their door for anything. I support my community and local businesses first.
The recent jump in the market correlates with the Fed REPO program where they give hundreds of millions to banks to buy stocks and then once the market is pumped they sell off and make another small fortune. Then they sell off and the market drops.
Ron Paul was your last chance America. Get used to the pump and dump banking industry, because it isn't going anywhere. Romney and Obama are both bought and sold by it.
QUOTE: "While gold rose to a 16-week high, the dollar fell to a two-month low."
Think there might be some connection there? What a great discovery!
The rest of it is just 'noise' tracking... Good for speculators who can turn on a dime... Valueless for the rest of us.
The German doctor comments: "That's nothing, in Germany we take part of the
brain out of a person; we put it into another person's head, and in 4 weeks he is looking for work."
A Russian doctor says: "That's nothing either. In Russia we take out half of the heart from a person; we put it into another person's chest, and in 2weeks he is looking for work."
The U.S. doctor answers immediately: "That's nothing my colleagues, you are way behind us....in the USA , about 3 and a half years ago, we grabbed a person from Chicago with no brain and transplanted him in the White House, and immediately after....... the whole damn country was looking for work
What say, Gomer?
"Surprise, surprise, surprise!"
This administration has been a miserable and total failure.
"Because when you make over 20 million dollars like romney you should pay more taxes than a teacher who makes 60k"
No Pete you've got it wrong...when you STEAL over 20 million dollars like Romney you should be thrown in jail, taxes are another story.
FUN FACTS> Employment expansion by Presidents
Bill Clinton ( 21.1% )
Ronald Reagan ( 17.6% )
Jimmy Carter ( 13.1% )
Gerald Ford ( 2.3% )
HW Bush ( 2.3% )
GW Bush ( 2.3% )
Yes it's true, Jimmy Carter, often called the worst President ever by Conservatives, created jobs at almost twice the rate as Ford, Bush and Bush combined.
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The offering could become the second-biggest this year if underwriters exercise an option to buy more shares.
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