Stocks End with Losses
Stocks finished lower on Thursday, with each of the major indexes down by 1% or more. The market was pressured by an extended rise in oil prices. Plus, cautious sentiment preceded third-quarter earnings from Dow component Alcoa (AA ) after the market close and the September employment report on Friday, says Standard & Poor's MarketScope.
The Dow Jones Industrial average declined 114.52 points, or 1.12%, to 10,125.4. The broader Standard & Poor's 500 index was down 11.4 points, or 1%, to 1,130.65. The tech-heavy Nasdaq composite index shed 22.51 points, or 1.14%, to 1,948.52.
In the energy markets, November NYMEX crude settled up 65 cents at $52.67 per barrel, another record high close, after ranging between $52.20 and $53 during trading. Supply continues to be a concern. Thursday's rally was led by news of a strike by Nigerian oil workers, as supply concerns continue to dominate market thinking, reports Action Economics.
The highlight Friday is the September employment report. Economists expect nonfarm payrolls to rise by 150,000. However, the three hurricanes in September could distort the number. There is significant risk that the unprecedented three hurricanes that hit between survey periods will depress hiring on the month, according to Action Economics.
The unemployment rate is expected to hold at 5.4%, the average workweek is seen at 33.8 hours, and hourly earnings are expected to rise 0.2%. The market will also take note of the preliminary estimate for this year's benchmark revision, says Action Economics.
An update on wholesale sales and inventories for August will also be released Friday.
Earnings will also be a focus on Friday, as third-quarter reporting season gets underway. Companies on the earnings calendar after Thursday's market close include Alcoa and Advanced Micro Devices (AMD ). On Friday, General Electric (GE ) will report results.
In economic news Thursday, initial jobless claims dropped 37,000 to 335,000, beating the expected 19,000 decline. The next update on the labor market is Friday's employment report for September.
Among the stocks moving in Thursday's session, Dow component Pfizer (PFE ) lost 4% as investors awaited a ruling on its bid to block a generic version of its epilepsy drug. Fellow Dow component and rival Merck (MRK ) was also down.
September sales figures for retailers were mixed, and retailing stocks were mostly higher. Target (TGT ) led the general merchandise group higher after posting a 5.6% rise in September same-store sales and 13% rise in total sales.
In apparel, Abercrombie & Fitch (ANF ) rallied after the chain posted 2% higher September same-store sales and 17% higher total sales. However, AnnTaylor Stores (ANN ) shares fell after the company cut its fiscal third-quarter projection.
In earnings news, Costco Wholesale (COST ) reported fourth-quarter earnings per share of 62 cents, vs. 51 cents a year ago, on 8% higher comparable warehouse sales and 11% higher net sales.
Marriott International (MAR ) posted third-quarter EPS of 59 cents, vs. 39 cents a year ago, on a 9% revenue rise. The hotel operator says third-quarter revenue per available room for comparable systemwide North American properties rose 7.7%. It sees $2.74 to $2.84 2005 EPS from continuing operations.
La-Z Boy (LZB ) says it sees lower-than-expected third-quarter EPS of 13 cents to 15 cents, including items. JP Morgan reportedly downgraded the stock to underweight from neutral.
In deal news, Clorox (CLX ) says it will exchange full ownership interest in a subsidiary for Henkel KGaA's 29% equity stake in Clorox in a deal valued at about $745 million. The subsidiary includes Clorox's Combat insecticide and Soft Scrub cleaning products businesses.
Treasury prices finished lower on Thursday. The bond market continued to brace for Friday's payrolls report even as it was pounded by a barrage of generally optimistic Fedspeak and suffered modestly at the hands of a 37,000 drop in initial jobless claims, says Action Economics. The yield on the benchmark 10-year note rose to 4.24%.
European stock markets finished with small losses on Thursday. London's Financial Times-Stock Exchange 100 index was down 7.6 points, or 0.16%, to 4,698.7. There was little reaction to the Bank of England's decision to leave interest rates unchanged at 4.75%.
Germany's DAX index fell 6.3 points, or 0.16%, to 4,043.36 as the European Central Bank, which recently was talking a tough line, left rates unchanged in light of recent weak economic data. In Paris, the CAC 40 index fell 5.89 points, or 0.16%, to 3,758.7.
In Asia, the markets finished mixed on Thursday. Japan's Nikkei 225 index fell 30.79 points, or 0.27%, to 11,354.59, snapping a five-day rising streak, as sentiment was weighed down by worries that high oil prices may impact corporate earnings. But energy shares such as Nippon Oil surged after U.S. energy stocks jumped overnight on record crude prices.
In Hong Kong, the Hang Seng index rose 50.16, or 0.38%, to 13,321.73, led by gains in utilities and energy names.
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