Fed's Gloomy Read on Economy Pushes Stocks Lower
Technology shares relinquished earlier gains to end lower on Thursday, after the release of minutes from the Federal Reserve's rate-setting meeting in June that pointed to a still sluggish economy. Blue chips, meanwhile, also finished down on a mixed batch of earnings reports.
The minutes of the Federal Open Market Committee (FOMC) meeting suggested the Fed is still grappling with an evolving slowdown, Standard & Poor's researchers note. In a separate action on Tuesday, the Fed cut interest rates for the seventh time in 2001 in hopes of jump-starting a stalled economy.
Meanwhile, there were more earnings results, some of them negative, to absorb. Kmart Corp. (KM ) reported a fiscal second-quarter loss as the discount chain's $80 million acquisition of its BlueLight.com online arm took a hit on results. Shares of Kmart lost more than 9%.
Among other stocks in the news Thursday, Krispy Kreme Doughnuts (KKD ) said fiscal second-quarter earnings jumped 65% as the doughnut chain continued to expand rapidly.
The Dow Jones industrial average finished down 48.58 points, or 0.47%, to 10,228.32. The Nasdaq Composite lost 17.04 points, or 0.92%, to 1,842.97. Active stocks included Cisco Systems Inc. (CSCO ) and biotech shares. Meanwhile, the broader S&P 500 was relatively flat, down 3.22 points, or 0.28%, to 1,162.09.
In currency markets, the U.S. dollar was higher versus the euro as traders reacted to a report of flat second-quarter growth in the German economy. Meanwhile, oil futures were mixed.
U.S Treasuries ended higher following the release of minutes from the June meeting of Federal Reserve policymakers. Earlier Thursday, the release of the weekly jobless claims report showed the number of U.S. workers applying for unemployment benefits rising 8,000 to 393,000 for the week ended Aug. 18. The previous week was revised up 5,000.
European markets finished Thursday's session mixed. In London, the Financial Times-Stock Exchange 100 index was down 12.20 points, or 0.23%, to 5,396.50. In France, the CAC 40 lost 2.64 points, or 0.05%, to 4,809.50.
In Germany, the DAX Index gained 33.83 points, or 0.65%, to 5,254.04, despite a government report that showed German second quarter GDP was unchanged, the first time it failed to grow since the second quarter in 1999. But observers anticipate a further slowdown, with some economists predicting the trend to continue into the third and fourth quarters.
In Asia, markets ended mixed. The Nikkei plunged 269.51 points, or 2.36%, to 11,126.92 -- the lowest close since Oct. 23, 1984. The market was pulled down largely by tech, telecom and export-related shares. In Hong Kong, the market added 156.81 points, or 1.40%, to 11,345.38.
By Heesun Wee in New York