Dow now at 10,430, down 67 points so far.
NEW YORK (AP) — Stocks fell Thursday as investors took a dim
view of the latest report on unemployment and warily waited for the
government’s reading on second-quarter gross domestic product.
Stocks initially rose on some upbeat earnings reports, but momentum
quickly faded. The Dow Jones industrial average fell nearly 74
points in midday trading and other major stock indexes also
fell.
Southwest Airlines Co., ExxonMobil Corp., Avon Products Inc. and
Sony Corp. all topped earnings forecasts, but investors were more
focused on economic numbers. The Labor Department said initial
claims for unemployment benefits dropped by a modest 11,000 to
457,000 last week. That’s slightly better than the 459,000 forecast
by economists polled by Thomson Reuters, but not good enough to
keep traders buying.
“They saw it was more of the same,” said Bryan Jordan, director of
financial markets analysis at Nationwide Investments. “This is an
unusually stagnant labor market.”
Daniel Penrod, senior industry analyst at the California Credit
Union League, said investors are concerned because there hasn’t
been a consistent decline in the number of claims for unemployment
benefits.
“The stops and starts are likely to cause more hesitation” in the
stock market, Penrod said.
Stock trading has been bumpy the past few months as investors tried
to reconcile conflicting views of the economy. Government and
private reports have pointed to a slowdown in growth while
companies has issued optimistic outlooks. So, while the latest
earnings reports looked good, investors are also well aware that
the Federal Reserve said Wednesday that the recovery is weakening
in some parts of the country.
“A bull market needs a continuing feeding of good news,” said Alan
Gayle, senior investment strategist at RidgeWorth Investments.
Economic reports have been “soft” this week, he said.
Ttraders were uneasy while they waited for the GDP, the broadest
measure of the economy. Economists are forecasting that the GDP
slowed in the second quarter to an annual rate of 2.5 percent as
the government cut back on economic stimulus programs. That would
be down from the first quarter’s 2.7 percent.
In midday trading, the Dow fell 73.64, or 0.7 percent, to
10,424.32. The Standard & Poor’s 500 index fell 9.64, or 0.9
percent, to 1,096.49, while the Nasdaq composite index fell 27.89,
or 1.2 percent, to 2,236.67.
Declining stocks outpaced advancers by 2 to 1 on the New York Stock
Exchange, where volume came to 418.5 million shares.
Bond prices rose. The yield on the benchmark 10-year Treasury note,
which moves opposite its price, fell to 2.98 percent from 2.99
percent late Wednesday.
Southwest reported income that beat analyst forecasts. The company
reported heavy traffic to start the summer travel season.
ExxonMobil’s earnings rose as a result of higher oil prices. Beauty
products seller cited sales in Europe and Latin America for its
higher income.
Japanese electronics maker Sony also reported strong earnings
because of a jump in sales of televisions and PlayStation 3 gaming
consoles.
Southwest shares fell 8 cents to $11.93 after climbing earlier in
the day. ExxonMobil dipped 31 cents to $60.60, also erasing earlier
gains. Avon Products rose 62 cents, or 2.1 percent, to $30.15. Sony
shares trading in the U.S. jumped $2.22, or 7.5 percent, to
$31.78.
Colgate-Palmolive’s earnings beat forecasts, but revenue fell short
of expectations. It also said it would take a bigger charge than
previously expected because of Venezuela’s devaluation of its
currency. When currencies in other countries fall, overseas profits
for U.S. companies also come in lower when they’re translated into
dollars.
The consumer products maker’s stock fell $7.07, or 8.4 percent, to
$76.79.
Strong earnings and outlooks helped stocks overseas. European
indexes mostly rose following strong earnings from pharmaceuticals
company AstraZeneca PLC, drug and materials company Bayer AG and
telecommunications companies BT PLC and France Telecom SA.
Moody’s Investors Service said ratings on banks in Europe would not
be affected following tests by regulators on the continent to
determine whether banks would survive a further economic slowdown.
Only seven of 91 banks failed the test, which reassured investors
that the financial industry in Europe is stronger than previously
thought.
The euro rose to $1.3064, and earlier in the day touched its
highest level since early May.
Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX index fell 0.7
percent, and France’s CAC-40 dropped 0.5 percent. Japan’s Nikkei
stock average fell 0.6 percent.
