U.S. stocks extended their losses on Thursday, as disappointing jobless claims data and some soft private sector readings from across the Atlantic stirred up economic worries once again. Stung by these lackluster reports, the major U.S. averages opened sharply lower, although they pared much of their losses by early afternoon trading.
While the Dow Industrials and the S&P 500 Index held close to the unchanged line until late trading, the Nasdaq Composite traded comfortably above the unchanged line.However, all three of the averages eventually succumbed to selling pressure and pulled back sharply to close moderately lower.
The Dow Industrials finished 76.89 points or 0.72% lower at 10,662 and the S&P 500 Index ended down 9.45 points or 3.2% at 1,125, while the Nasdaq Composite Index lost 7.47 points or 0.32% before ending at 2,327.
Twenty-six of the thirty Dow components closed lower, with American Express (AXP), Bank of America (BAC), Disney (DIS), General Electric (GE) and JP Morgan Chase (JPM) among the notable decliners. On the other hand, Hewlett-Packard (HPQ) gained more than 1.50%.
Among the sector indexes, the Dow Jones Transportation Average fell 1.90%, the KBW Bank Index receded 1.86%, the NYSE Arca Securities Broker/Dealer Index slid 1.18% and the Philadelphia Housing Sector Index declined 1.96%. The Philadelphia Oil Service Index, the NYSE Arca Oil Index, the Dow Jones U.S. Basic Materials Average, the Dow Jones Utility Average and the NYSE Arca Gold Bugs Index all fell close to 1%.
On the economic front, the Labor Department said jobless claims rose 12,000 to 465,000 in the week ended September 18th. At the same time, continuing claims for the week ended September 11th fell 48,000 to 4.49 million. However, extended benefits past 26 weeks rose by a net 208,000.
The National Association of Realtors’ existing home sales report showed that existing home sales rose7.6% month-over-month to 4.13 million units in August from 3.84 million units in July. The increase was mainly due to a bounce in single-family home sales, which came in at a seasonally adjusted annual rate of 3.62 million units. Inventories as measured by months of supply fell to 11.6 from 12.5, while the median price of an existing home fell 0.8% year-over-year to $178,600.
Meanwhile, the Conference Board’s leading economic indicators index rose 0.3% month-over-month in August, better than the mere 0.1% increase expected by economists. The increase was mainly due to a steeper yield curve. However, jobs and orders acted as drags on the index. The lagging index was up 0.2%, while the coincident index remained unchanged.
Currency, Commodity Markets
Crude oil futures are moving up $0.51 to $75.96 a barrel after advancing $0.47 to $75.18 a barrel on Thursday. Gold futures are currently rising $2.30 to $1,298.60 an ounce. In the previous session, gold rose $4.20 to $1,296.30 an ounce.
Among currencies, the U.S. dollar is trading at 84.331 yen compared to the 84.3815 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is currently valued at $1.3430 compared to yesterday’s $1.3315.
Asia
The major Asian markets ended Friday’s session on a mixed note, as the lackluster lead from Wall Street continued to weigh on stocks. The Chinese market remained shut for a public holiday.
Japan’s Nikkei 225 average languished notably below the unchanged line before reports of government intervention in the forex market that led to the weakening of the yen generated some buying interest. Although the index staged a recovery in late trading and showed some volatility thereafter, it pulled back decisively into negative territory to close lower. The Nikkei ended down 94.65 points or 0.99% at 9,472.
A majority of stocks declined, with the exception of some defensive pharma and real estate stocks. Internet stocks Yahoo Japan and Softbank also advanced. Some financial stocks also found buying interest.
Australia’s All Ordinaries opened modestly lower and dipped sharply in early trading. The index pared back most of their losses over the course of the session until late trading before pulling back once again. At the close of trading, the index was down 28.50 points or 0.61% at 4,652. Most sectors, barring healthcare stocks, showed moderate weakness.
Hong Kong’s Hang Seng Index, which showed a lack of direction in early trading, advanced in late morning trading. After moving broadly sideways in the morning, the index legged up further, closing up 71.72 points or 0.33% at 22,119.
Property and utility stocks advanced in the session , while China-related ended mostly lower. Index heavyweight HSBC Holdings declined moderately amid reports that its CEO Michael Geoghegan will step down at the end of the year. It is also being speculated that the company’s CFO Douglas Fint will be elevated to the chief executive role.
Europe
The major European markets are recovering from early weakness and are looking poised to break their three-session losing streak on Friday. The French CAC 40 Index is moving up 1.02% and the German DAX Index is gaining 1.05%, while the U.K. FTSE 100 Index advancing 0.62%.
In economic news, the French economy grew at a faster pace than previously estimated between April and June, official figures showed. The revision was due to a softer decline in trade and strong consumer spending and investment.
Statistical office Insee said gross domestic product rose 0.7% between April and June compared to three months earlier, slightly better than the 0.6% expansion estimated earlier and higher than the 0.2% growth in the first quarter. Economists had expected the initial growth estimate to be confirmed.
A report released by German Federal Statistical Office showed that Germany’s import price index rose 8.6% year-over-year in August compared to the 9.9% pace of worth in July. Economists had expected an 8.7% increase. On a monthly basis, import prices increased a more modest 0.2% following a 0.2% drop in the previous month. At the same time, export prices rose 4.2% year-over-year and 0.4% month-over-month.
The results of the Ifo Institute’s business climate survey for September showed that its business climate index unexpectedly increased to 106.8 points from 106.7 in August. The present situation index rose 1.5 points to 109.7, while the expectations index slid 1.3 points to 103.9.
U.S. Economic Reports
The Commerce Department reported that durable goods orders fell 1.3% month-over-month in August. Economists had estimated a 1.4% drop in durable goods orders. Excluding transportation orders, new orders increased 2%.
Transportation equipment orders fell 10.3%, primarily dragging down the headline number. Capital goods order, excluding aircraft, rose 4.1% following a 5.3% drop in the previous month.
The Commerce Department is also due to release its new home sales report for August at 10 AM ET. The consensus estimate calls new homes sales of 291,000.
New home sales came in at an annualized rate of 276,000 in July compared to expectations of 334,000 and the 315,000 reported for June. Inventories measured in terms of months of supply rose to 9.1 months from 8 months, while the median price of a new home declined 6% month-over-month.
Richmond Federal Reserve Bank President Jeffrey Lacker is scheduled to speak about economics and policy to the Kentucky Economic Association in Frankfort, Kentucky, at 1 PM ET. An hour later, Philadelphia Federal Reserve Bank President Charles Plosser is due to speak about monetary policy at a Swiss National Bank conference in Zurich.
Stocks in Focus
KB Home (KBH) is rallying in Friday’s after hours session after it reported a loss of 2 cents per share, narrower than the net loss of 87 cents per share last year. Revenues rose 9% to $501 million. Analysts estimated a loss of 15 cents per share on revenues of $483.53 million.
AmerisourceBergen (ABC) could be in focus after it authorized a new share repurchase program to buy $500 million worth of shares, effective after completion of the current repurchase program.
Zale (ZLC) may also see some activity after its board named its interim CEO Theo Killion to the post of CEO on a permanent basis.
Anixter International (AXE) could gain ground after it announced that its board declared the payment of a special dividend of $3.25 per share for a total cash outlay of $110 million.
Comtech Telecommunications (CMTL) rallied sharply in Thursday’s after hours session after it reported fourth quarter non-GAAP earnings of 73 cents per share. Net sales rose to $256.95 million from the year-ago’s $122.03 million. Analysts estimated earnings of 58 cents per share on revenues of $237.53 million.
However, Finish Line (FINL) slipped in Thursday’s after hours session after it reported second quarter income from continuing operations of 31 cents per share compared to 21 cents per share last year. Sales edged up 0.8% to $301.1 million. The consensus estimates had called for earnings of 36 cents per share on revenues of $316 million. The company also said its same store sales for the period from August 29th through September 19th rose 6.2% on top of a 7% increase in the year-ago period.
Advanced Micro Devices (AMD) rose moderately in Thursday’s after hours session despite reducing its third quarter revenue outlook. The company now a expects 1%-4% sequential revenue decline, translating to revenues of $1.64 billion to $1.58 billion. The company attributed the toned down outlook to weak demand, particularly in the consumer notebook market in Western Europe and North America.
Nike (NKE) rose sharply in Thursday’s after hours session after it reported first quarter earnings of $1.14 per share, up 10% year-over-year. The company’s revenues rose 8% to $5.2 billion. Analysts estimated earnings of $1.01 per share on revenues of $5.22 billion. The company also noted that future orders, scheduled for delivery from September 2010 through January 2011, totaled $7.1 billion, up 10% year-over-year.
Tibco Software (TIBX) may also be in focus after it reported that its third quarter non-GAAP net income rose to 17 cents per share from 13 cents per share last year. Revenues climbed to $184.5 million from the year-ago’s $150.3 million, exceeding the $175.46 million consensus estimate. Separately, the company announced a deal to buy OpenSpirit Corp., an application software provider for the global oil and gas market. The company did not divulge the terms of the deal.
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