Stocks edged slightly lower on Thursday as investors got more economic data and wrestled with the outlook for interest rates. Bond yields rose during the session, but pared gains. The choppy stock activity was likely associated with the quarterly expiration of futures and options Friday, notes Standard & Poor's MarketScope.
The Dow Jones industrial average fell 1.84 points, or 0.02%, to 10,881.67. The broader Standard & Poor's 500 index was down 1.8 points, or 0.14%, to 1,270.94. The tech-heavy Nasdaq composite index lost 1.96 points, or 0.09%, to 2,260.63.
In economic news, the consumer price index (CPI) fell 0.6% in November, while the core index that excludes energy and food prices rose 0.2%, after gains of 0.2% for both in October. On a year-over-year basis, the headline CPI pace slipped to 3.5% from 4.3%. The core was steady at 2.1%. As expected, an 8% retreat in energy prices (gas fell 16.0%) was a drag on the overall index. Medical care prices rose 0.6%.
U.S. industrial production climbed 0.7% in November, above the median forecast. Capital utilization rose to 80.2% from 79.8%.
U.S. initial jobless claims rose 1,000 to 329,000 in the week ended Dec. 10, exceeding expectations for a pull-back. Continuing claims rose 21,000 in the week ended Dec. 3.
The Empire State manufacturing index rose to 28.7 in December even after jumping 10 points to 22.82 in November, belying expectations for some erosion, says Action Economics. Prices paid fell to 47.2 from 60.58. New orders rose to 30.2 from 25.92. Employment fell to 6.6 from 16.91.
The Philly Fed index edged up to 12.6 in December, below the median forecast.
Among companies in the news, Altria Group (MO) jumped nearly 4% on a favorable court ruling. The Illinois Supreme Court overturned the $10.1 billion verdict in the Phillip Morris Price "Lights" case. Philip Morris had been accused of defrauding customers into thinking "light" cigarettes were safer than regular cigarettes.
Merck (MRK) announced initiatives that will position it to deliver top-line growth and double-digit EPS growth (excluding charges) over the next three to five years. Beyond 2010, it expects to deliver sustained revenue and EPS growth fueled by strong pipeline.
Goldman Sachs (GS) shares fell after the investment bank posted fourth-quarter EPS of $3.35, vs. $2.36 a year ago, on 9% higher total investment banking revenue.
Activision (ATVI) expects third-quarter EPS to be "significantly" lower than expected due to weaker-than-expected sales and competitive pricing. The video game software maker says the fourth-quarter will also be negatively impacted.
Microsoft (MSFT) raised its quarterly dividend by 12.5% to 9 cents per share.
Lennar (LEN) posted fourth-quarter EPS of $3.54, up from $2.29 a year ago, on a 42% revenue rise. The homebuilder reaffirms $9.25 fiscal year 2006 EPS goal.
In deal news, Abgenix (ABGX) agreed to be acquired by Amgen (AMGN) for about $2.2 billion, plus debt assumption, or $22.50 cash per share.
In Europe, London's FTSE-100, Germany's DAX, and France's CAC-40 indexes finished mixed.
In Asia, Japan's Nikkei index tumbled 210.14 points (1.36%) to 15,254.44 as dollar weakness sent exporters on a free fall. A stronger yen, resulting from weakness in the greenback, makes Japanese products less attractively priced in foreign markets, says Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index rose 82.76 points (0.55%) to 15,059.02. Property shares led the Hong Kong market higher as interest rate concerns eased, says Standard & Poor's MarketScope.
Treasury yields rose following the latest batch of economic news. The benchmark 10-year note yield ended up at 4.47%.