Related News

Home » Business » Finance

Stocks slip after jobless claims report

THE Dow Jones industrial average and other major indexes suffered moderate losses yesterday as worries about the government's July employment report due Friday dominated trading for a third day.

A stream of disappointing July sales numbers from major retailers added to Wall Street's uneasy mood.

A recovery in the job market is crucial to the economy's ability to pull itself from the longest recession since World War II. Unemployment often keeps rising after a recovery begins, but investors need to see the pace of job losses slowing before they'll continue the rally that began last spring.

Even with the worries about jobs, the market's slowdown this week isn't surprising. Analysts have been calling for a time-out because the Dow has surged 13.6 percent in just 19 days on hopes the economy is strengthening.

Still, without some improvement in employment, investors are likely to get more of the disappointing reports that retailers delivered yesterday. Many of the biggest U.S. store chains posted disappointing sales for July as consumers worried about jobs spent gingerly.

"The consumer isn't dead, but he's injured," said Stephen Wood, chief market strategist at Russell Investments.

A mixed weekly unemployment report offered investors little encouragement ahead of Friday's numbers. The government said new claims for unemployment benefits fell to 550,000 last week, from a revised 588,000 the previous week. Economists had been looking for 580,000 new claims.

There also was sobering news: The number of people continuing to claim benefits rose by 69,000 to 6.3 million after dropping for three straight weeks.

The weekly jobs figures and the retailers' reports have investors concerned that consumers don't feel confident enough to give the economy a strong recovery. Consumer spending accounts for more than two-thirds of U.S. economic activity.

The Dow fell 24.71, or 0.3 percent, to 9,256.26. The Standard & Poor's 500 index lost 5.64, or 0.6 percent, to 997.08, its first finish below 1,000 since Friday. The Nasdaq composite index fell 19.89, or 1 percent, to 1,973.16.

About three stocks fell for every two that rose on the New York Stock Exchange where volume came to 1.4 billion shares compared with 1.9 billion traded Wednesday.

Despite the growing caution in the market, analysts have been encouraged by the orderliness of the pullback, noting that stocks have shown strength in their ability to hold on to most of their gains rather than selling off sharply.

"We're not seeing panic selling," said Bill Groeneveld, president and head trader for vFinance Investments. "We always like to see some reassessment of where we're at."

A modest drop in stocks on Wednesday followed minimal gains on Tuesday. Those moves came after a surge on Monday that nudged the S&P 500 index above 1,000 for the first time since November.

The market soared last month on signs of improvement in industries such as housing and manufacturing, but worries over rising unemployment and still-sagging consumer spending have halted the market's rally.

"You're beginning to get a mixed bag of data," said Russell Investments' Wood. "I think that creates probably more lumpy returns in the market. It's not as clear-cut as when we were in a nosedive, but it's also far from clear that there is going to be a brisk recovery in the near future."

American Express Co. helped pull up shares of some financial companies after the credit card issuer said that the rate of losses on credit card loans is slowing.

AmEx shares rose 95 cents, or 3.1 percent, to US$31.31. Shares of Citigroup Inc., among the banks hit hardest by the credit crisis, rose 22 cents, or 6.2 percent, to US$3.80.

Shares of retailers were mixed following the lackluster sales reports. Teen retailer Wet Seal Inc. slipped 6 cents, or 1.8 percent, to US$3.31, while Limited Brands Inc. shot up US$1.65, or 13 percent, to US$14.39.

In other trading, the Russell 2000 index of smaller companies fell 8.37, or 1.5 percent, to 557.62.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note rose to 3.77 percent from 3.75 percent late Wednesday.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend