Stocks finished with small losses on Thursday, even though oil prices cooled throughout the session, as investors showed a lack of conviction in the market's direction, according to Standard & Poor's MarketScope.
The Dow Jones industrial average ended down 8.33 points, or 0.08%, to finish at 10,173.41. The broader Standard & Poor's 500 index added 0.13 point, to 1,105.09. The tech-heavy Nasdaq composite index fell 7.8 points, or 0.42%, to 1,852.92. Chip equipment and electrical equipment led the tech sector lower.
Thursday's trading volume was the lowest it has been all year -- with barely 1 billion shares traded on the New York Stock Exchange -- and it may not pick up until after Labor Day "given that the GOP convention in New York next week is likely to keep traders away from the city," says economic research firm Informa Global Markets.
A.C. Moore, chief investment strategist at Dunvegan Associates in California, notes that amid such light volume, it's easier to see underlying market trends, and that the current markets are technically overbought. Likely with some help from falling oil prices, "markets are still failing to respond negatively to that [overbought state], which could be a positive," he says.
The price of oil stuck to its downward-trend for the fifth day in a row. October NYMEX crude oil futures were around $43.10 per barrel, though they reached $42.50 during the session. Reports of a peace agreement between Iraqi clerics Grand Ayatollah Ali al-Sistani and rebel leader Moqtada al-Sadar in Najaf, Iraq, helped prices dip late in the session. OPEC's president has called for a faster retreat in oil prices and an output increase.
In economic news, initial jobless claims rose 10,000 to 343,000, above an expected 4,000 rise. The Bureau of Labor Statistics said that half of that gain was due to Hurricane Charley.
The remainder of the week's economic calendar is thin. On Friday, traders will get the second-quarter gross domestic product revision. Action Economics expects a downward revision in the official GDP estimate to 2.7% from 3%. Also coming is the final reading of Michigan consumer sentiment for August.
Also on Friday, Federal Reserve Chairman Alan Greenspan will speak on demographic changes at the Kansas City Fed's annual monetary policy conference in Jackson Hole, Wyoming. Analysts don't expect Greenspan to talk about Fed policy.
Stocks on the move on Thursday included Dow component Merck (MRK), which shed 2.1% on a Wall Street Journal report that Kaiser Permanente is reconsidering use of its arthritis medicine Vioxx.
Airline stocks were higher as the price of oil fell.
Semiconductor stocks were weighed down following a Banc of America downgrade of Advanced Micro Devices (AMD) to neutral from buy. AMD moved 3.1% lower.
Starbucks (SBUX) reported 8% higher August same-store sales and 25% higher consolidated net revenues. WR Hambrecht reiterated its buy rating. Shares lost 6.5%.
Apollo Group (APOL) was 8.3% higher after the company said it expects first-quarter revenue to be as high as $532 million. The for-profit education company says fiscal 2005 revenue could be as high as $2.2 billion. S&P has reiterated its hold rating.
In earnings news, Krispy Kreme (KKD) moved 10% lower after the doughnut maker reported second-quarter earnings per share of 9 cents, vs. 21 cents a year ago, as higher expenses, charges, and costs offset flat same-store system wide sales and 11% total revenue rise. The company sees 15% fiscal year 2005 system wide same-store sales growth. S&P has reiterated its hold rating.
Dollar General (DG) posted second-quarter EPS of 22 cents, vs. 18 cents a year ago, on 3.2% same-store sales rise and 11% total sales rise. Shares ended lower.
The rest of the week's earnings calendar is light.
U.S. Treasuries finished higher in price Thursday, amid light volume. Lower oil prices remained the focus, notes Informa Global Markets.
European stock markets finished higher on Thursday, as oil prices fell on word of a call for ceasefire in Najaf, Iraq. London's Financial Times-Stock Exchange 100 index added 34.3 points, or 0.78%, to end at 4,445.9, as Brent crude oil prices fell.
The pound sterling was a touch weaker, at $1.793, as the British Banking Association says that lending slowed in July as a result of higher interest rates.
Germany's DAX index ended up 43.4 points, or 1.15%, to 3,832.28. The Business Confidence index fell for the third straight month, with respondents worried that high oil prices could slow economic recovery attempts, reports S&P MarketScope. In Paris, the CAC 40 index gained 34.58 points, or 0.96%, to 3,629.84.
Asian markets finished around the unchanged levels on Thursday. Japan's Nikkei 225 index ended down 0.69 point, to close at 11,129.33. In Hong Kong, the Hang Seng index slipped 8.64 points, or 0.07%, to close at 12,784.39.