Stocks ended barely changed on Thursday as signs of poor economic health and shabby corporate profits kept investors at bay.
Jay Suskind, director of equity trading at Ryan Beck & Co. noted that volume has been light all week as investors have been hesitant to jump back into the market. That could turn around if the market starts to get some positive economic data. "If we get some more macro numbers that show improvement convincingly, then you'll see the market rally," Suskind says.
However, it seems that Wall Street may not get strong economic data anytime soon. The major indexes on Thursday were stifled by the latest unemployment claims update and import and export prices report, both of which were not as strong as expected. While the data suggested that the Federal Reserve will cut rates again, investors were not cheered by the prospect of more monetary easing.
So far, lower borrowing costs have done little to spark the economy. The Fed has already cut its key lending rate by 2.75 percentage points to 3.75% since the beginning of the year, but analysts are counting on continued aggressive cutting to jumpstart the economy and corporate profits. Most analysts expect a 25 basis point rate cut at the next meeting of the FOMC -- the Fed's rate-setting committee -- on Aug. 21.
On Wednesday the major stock indexes were pummeled by the Fed's beige book, which provides an update on economic conditions across the country. It showed that the economy was sluggish in June and July. Tech bellwether Cisco Systems (CSCO ) also cautioned with its second-quarter earnings report that a recovery may not be on the horizon for some time.
Among Thursday's stocks in the news, Dow component Wal-Mart Stores Inc. (WMT ), the world's largest retailer, said sales at stores open at least a year rose 6% in July, were above its expectations.
Discount retailers overall were strong after they reported solid July sales figures while department stores such as Saks (SKS ) and apparel retailers such as Abercrombie & Fitch (ANF ) reported declines in stores open at least one year.
The Dow Jones Industrial Average finished higher by 5.06 points, 0.05%, to 10,298.56. The tech-heavy Nasdaq Composite lost 3.07 points, or 0.16%, to 1,963.29. The broader S&P 500 Index fell 0.11 points, or 0.01%, to 1,183.42.
Investors on Friday will look to the July update on the producer price index, a key gauge of inflation at the wholesale level. Economists are forecasting a 0.4% decline for the month, while the core index is expected to rise 0.1%.
U.S. Treasuries finished lower on lower-than-anticipated demand for bonds after the government's $5 billion sale, adding to concerns that another round of interest-rate cuts would do little to boost credit markets. Earlier in Thursday's session, Treasuries rose on weakness in stocks and modestly higher jobless claims data.
The latest update on U.S. import prices, a key gauge of inflation. Import prices fell 1.6% in July after slipping 0.4% in June. The drop is the biggest since 1992. Petroleum prices were lower by 6.1% after easing 0.8% the month before. Export prices fell 0.4% in July after rising 0.2% in June. These data are positive news for bonds, S&P's economic research unit says.
In other economic data, intial jobless claims rose 33,000 to 385,000 in the week ended Aug. 4 from 352,000 the week before. The rise was higher then expected. Economists had forecasted claims to rise to 373,000. Looking on the bright side, the four-week moving average fell to 380,000 from 396,000 week before.
European markets finished lower on worries that a global slowdown could last longer than previously expected. In London, the Financial Times-Stock Exchange 100 index closed down 73.60 points, or 1.34% to 5,402.90, while bonds climbed on signs of slowing economic growth that heightened speculation Bank of England will have to cut rates again soon to get things moving again.
In Germany, the DAX Index shed 102.23 points, or 1.82%, to 5,512.28, on worries about the economic slowdown. In France, the CAC 40 ended lower by 97.93 points, or 1.96%, to 4,888.30.
In Asia, markets ended lower, on the heels of the Fed's beige book report. The Nikkei 225 index ended off sharply, down 409.11 points, or 3.36%, to 11,754.56. In Hong Kong, the Hang Seng stock index lost 241.24 points, or 2.02%, to 11,716.77.
By Amy Tsao in New York