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.

By Melly Alazraki Aug 23, 2012 9:23AM

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.

 

Best Buy (BBY) shares rose after Bloomberg reported the electronics retailer has restarted talks with founder Richard Schulze about conducting due diligence as part of his effort to buy the company.

 

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.


Hormel Foods (HRL) said fiscal-third-quarter earnings rose 13%, meeting analyst expectations, as all of the food processor's segments saw increased profits, the Dow Jones reported.


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.

357Comments
Aug 23, 2012 12:53PM
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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

Aug 23, 2012 12:51PM
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"Why does Wal-Mart slash prices on crap that we do not really need ,like i-Phones, rather than groceries,and clothing?"

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. 
Aug 23, 2012 12:41PM
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You are all being PLAYED!!! The title of this article should read, "Stocks go lower as Federal Reserve REPO contracts come to close."

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.

Aug 23, 2012 12:40PM
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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.

Aug 23, 2012 12:36PM
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Go Green! Recycle Obama and the Senate!
Aug 23, 2012 12:35PM
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Why does Walmart slash prices on crap that we do not really need ,like iphones, rather than groceries,and clothing?Hu?
Aug 23, 2012 12:32PM
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 Where DID that 200 page report about Mitt's taxes compiled by McCain end up. In a safe? Shredded? How many people have laid eyes on them? Investigative reporters, do your thing. Maybe somebody is mad about  what they saw
Aug 23, 2012 12:32PM
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A doctor from France says: "In France, the medicine is so advanced that we cut off a man's testicles; we put them into another man, and in 6 weeks he is looking for work."
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
Aug 23, 2012 12:31PM
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What's needed here is a famous quote...

Got it!!

What say, Gomer?

"Surprise, surprise, surprise!"

This administration has been a miserable and total failure.

EPIC FAIL!!

Aug 23, 2012 12:30PM
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"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.

Aug 23, 2012 12:30PM
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 And then Wikileaks did their thing with Mitt's tax returns
Aug 23, 2012 12:28PM
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Republicans claimed we were less safe once obama became in office and would likely be attacked by terrorists......

Guess they were wrong like usual....it was quite the opposite....Obama got Bin Laden

LOL
Aug 23, 2012 12:28PM
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 Circa Oct 1. The NY Times reports that sources say Mitt took advantage of the Swiss Bank Account amnesty program offered by the IRS. Hence releasing his tax forms would be the kiss of death for Mitt--- so leak them instead
Aug 23, 2012 12:25PM
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Because when you make over 20 million dollars like romney you should pay more taxes than a teacher who makes 60k

Its pretty simple stuff

Warren Buffet agrees with me as well
Aug 23, 2012 12:25PM
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Nobama. The least competent president ever.
Aug 23, 2012 12:24PM
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 Pete-- they shut up  the Bin Laden swift boat attacks by rolling out that Mitt was too important to go to Vietnam. They could dish it out but they couldn't take it
Aug 23, 2012 12:22PM
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Instead of persecuting Romney and his rich friends about not paying enough in taxes how about Obama and his wealthy friends in the entertainment and the business world paying $ 40,000 per plate for an Obama re-election fund raiser? What happens to all of the surplus funds that are left over from these political campaigns? Are these funds returned to people in need? I can't help but think that the $100 million dollars raised each month to allow candidates to run for office could not help the poor and ravaged middle class in this country. How many super rich liberals in this country are paying more in taxes than they are required to pay? And let's be completely honest, do we really want to pay more in taxes than is required by our tax laws to a government filled with corruption, wasteful spending and fraud? Instead of complaining about whether someone pays more in taxes than you as a percentage of income, why not insist on cleaning up the corruption, wasteful spending and the fraud our government is guilty of everyday!  
Aug 23, 2012 12:21PM
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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.

Aug 23, 2012 12:20PM
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How is this unexpected?  Employers have been warning for months they will not hire because of the uncertainty and the fiscal cliff that is right in front of us. 
Aug 23, 2012 12:20PM
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Excellent post, Alias. Mentioned much the same in multiple posts past. This will all come out as to your queries.  He should "never" have gotten this far, period.  Just to name a few that do know this.....the Clinton's know....Arapaio knows..... Panetta knows...Reid knows....Pelosi knows...I could go on.  His birth certificate is a forgery, period. 

 

Why the Republican party is sitting on their thumbs about this is impossible to believe!  We have an illegal, to be President of the United States by Constitutional dictates/mandates, in office right now.  He is guilty of treason and should have been removed long ago.  This will all come out.

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