Stocks slide in late trading after weekly first-time jobless claims drop less than forecastBy Tim Paradis, AP
Thursday, May 13, 2010
Stocks slide after disappointing jobs report
NEW YORK — Stocks turned lower in late trading Thursday after a report showed that gains in the job market are proceeding slowly.
Major stock indexes stalled and then fell in the final hour of trading. That signals traders are uncertain about where the market is heading. Stocks had jumped on Wednesday after investors’ attention returned to the U.S. economy from Europe’s struggles to contain a debt crisis.
The latest unemployment claims report was disappointing. The Labor Department said first-time claims for jobless benefits dipped to 444,000 last week from an upwardly revised 448,000 the previous week. Economists had expected claims to drop to 440,000.
While a fourth straight weekly decline in claims is a welcome sign, it hasn’t been enough to signal sustainable job growth. Economists estimate weekly initial claims need to fall below 425,000 to show employers are consistently adding workers. Claims have stalled around the 450,000 level throughout the year.
High unemployment remains a major obstacle to a strong recovery. The unemployment rate jumped to 9.9 percent last month, although employers added 290,000 jobs. Investors want to see consistent job creation as well as regular declines in claims for jobless benefits before becoming confident that the labor market is healing.
“The initial jobless claims are still going the wrong way,” said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York.
With little other economic news to go on traders focused on a government report on retail sales due Friday that could provide more insight into the well-being of consumers whose spending is important to the economy.
In late afternoon trading, the Dow Jones industrial average fell 75.35, or 0.7 percent, to 10,821.56. The Standard & Poor’s 500 index fell 10.43, or 0.9 percent, to 1,161.24, while the Nasdaq composite index fell 24.79, or 1 percent, to 2,400.23.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 781.8 million shares, compared with 905 million traded at the same point Wednesday.
Volume has been decreasing this week since stocks jumped on Monday on relief over Europe’s nearly $1 trillion plan help debt-strapped governments in the European Union. Some analysts say that the drop in volume is a sign of flagging confidence in the market’s moves.
Stocks rose Wednesday after a Commerce Department report said exports rose in March to their highest levels since late 2008. That bodes well for the manufacturing sector, which has been steadily improving in recent months. The Dow jumped about 149 points, bringing it back to where it was before the slide late last week.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.57 percent from 3.58 percent late Wednesday.
Gold fell, a day after setting a record high.
Crude oil fell $1.25 to $75.40 per barrel on the New York Mercantile Exchange.
European markets rose, but there is still some concern about the long-term health of the continent’s economy. The euro again lost value compared to the dollar as investors remain unsure whether countries like Greece and Spain that are saddled with debt will be able to cut spending and still manage to grow.
Worries about weak economic growth across Europe have pushed the euro to a 14-month low against the dollar. The euro has lost about 12 percent of its value against the dollar since the beginning of the year.
Among stocks, Cisco Systems Inc. fell after the maker of computer networking equipment reported fiscal-third quarter earnings rose 63 percent. Cisco fell $1.22, or 4.6 percent, to $25.52.
The Russell 2000 index of smaller companies fell 6.59, or 0.9 percent, to 709.52.
Britain’s FTSE 100 rose 0.9 percent, Germany’s DAX index rose 1.1 percent, and France’s CAC-40 slipped 0.1 percent. Japan’s Nikkei stock average rose 2.2 percent following Wednesday’s big gains in the U.S.
Tags: Commodity Markets, Europe, Labor Economy, Manufacturing Sector Performance, New York, North America, United States