Kitsap Business and Economy

Dow Now at 10,449, down just three points.

NEW YORK (AP) — Investors didn’t make any big bets on stocks after a weak snapshot of the service industry revived worries about the economy’s ability to recover.
Major stock indicators traded mixed Thursday after the Institute for Supply Management said its index of activity in the service industry fell to 48.7 in November from 50.6 in October. That’s well below the 51.5 figure analysts had been expecting and signals contraction.
The market rose at the start of trading following a Labor Department report that new claims for unemployment benefits fell unexpectedly for the fifth straight week and Bank of America Corp.’s announcement late Wednesday that it would repay its $45 billion in government bailout money.
The government said the number of laid-off workers seeking unemployment benefits fell by 5,000 last week to 457,000, in a hopeful sign of improvement in the job market. Economists had expected an increase, according to a survey by Thomson Reuters. The report comes a day ahead of the government’s November unemployment report.
A separate government report found that economic productivity rose by largest amount in six years in July-September quarter while labor costs dropped. The Labor Department said productivity was rising at an annual rate of 8.1 percent in the third quarter, the biggest jump since 2003, while unit labor costs were falling at a 2.5 percent rate.
The news signals that inflation is remains under control, but it also suggests that workers’ wages are getting squeezed, raising doubts about how durable the economic recovery will be.
Financial stocks got a boost from Bank of America’s plans to repay what it owes the government. The bank, which has been struggling to find a new CEO because of the restrictions on executive pay that accompanied the bailout, said late Wednesday it will raise more than $18 billion in capital to help fund the repayment. Bank of America said it expected the move would help it recruit a successor to the retiring Ken Lewis.
Investors are seeing the bank’s move as a sign of its increasing strength and that economic conditions are improving.
Burt White, chief investment officer at LPL Financial in Boston, said the occasional downbeat economic reports aren’t likely to derail the market as investors continue to see longer-term improvements in the economy.
“We do hit some speed bumps on the road and today we hit a couple, especially with ISM, but we’re still pretty bullish that stocks have a way to go,” he said.
In midday trading, the Dow Jones industrial average fell 5.66, or 0.1 percent, to 10,447.02. The broader Standard & Poor’s 500 index rose 0.22, or less than 0.1 percent, to 1,109.46, while the Nasdaq composite index rose 7.50, or 0.3 percent, to 2,192.53.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.37 percent from 3.32 percent late Wednesday.
The dollar mostly rose against other major currencies, while gold fell.
Crude oil fell 33 cents to $76.27 on the New York Mercantile Exchange.
Among banks, Bank of America rose 51 cents, or 3.3 percent, to $16.16.
Four stocks rose for every three that fell on the New York Stock Exchange, where volume came to 432.8 million shares compared with 409.6 million shares traded Wednesday.
The Russell 2000 index of smaller companies rose 2.08, or 0.4 percent, to 598.17.
Overseas, Japan’s Nikkei stock average rose 3.8 percent. In afternoon trading, Britain’s FTSE 100 fell 0.3 percent, while Germany’s DAX index fell 0.2 percent, and France’s CAC-40 rose 0.1 percent.

This entry was posted on Thursday, December 3rd, 2009 at 9:47 am by Rachel Pritchett and is filed under Uncatagorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.