Stocks Dip After Economic Data
(09-06) 07:46 PDT NEW YORK, (AP) —
Stocks dipped Thursday as investors, trying to gauge whether the economy is holding up in the face of a weakening housing market, grappled with mixed data and soaring oil prices.
The sluggish housing market remains a key concern on Wall Street, and the Mortgage Bankers Association said Thursday that homeowners beginning the foreclosure process in the second quarter reached a record 0.65 percent. It was the third consecutive quarter that the figure reached an all-time high.
Though Wall Street wants growth to be slow enough to merit a rate cut from the Federal Reserve when it meets Sept. 18, it does not want to see the economy weaken to the point of recession.
It also doesn’t want to see signs of accelerating inflation Д such as surging crude-oil prices, which spiked above $77 a barrel Thursday on supply worries after the U.S. embassy in Nigeria said American and other Western interests in the country are at risk of a terrorist attack. Inflationary risks have kept the Fed from lowering interest rates in recent months.
Still, the job market, the service sector and August retail sales look good. Last week, for the first time in seven weeks, claims for unemployment benefits dropped, the Labor Department said. It also reported that worker productivity jumped to an annual growth rate of 2.6 percent in the April to June quarter, much better than expected.
The snapshots boded well for Friday’s August employment report, the week’s most anticipated piece of economic data. If Americans are working, they can usually keep paying their mortgages and spending money.
And with investors alert for any sign that recent financial market turmoil has hurt consumer spending, better-than-expected August sales from major retailers Wal-Mart Stores Inc. and Target Corp. came as a welcome surprise. So did the Institute for Supply Management’s reading on the non-manufacturing sector, which showed that activity expanded in August at the same rate as in July.
In mid-morning trading, the Dow Jones industrial average fell 4.72, or 0.04 percent, to 13,300.75, after rising in earlier trading.
Broader stock indicators also turned lower. The Standard & Poor’s 500 index was down 2.42, or 0.16 percent, at 1,469.87, and the Nasdaq composite index fell 6.78, or 0.26 percent, to 2,599.17.
Bonds were little changed. The yield on the benchmark 10-year Treasury note was at 4.47 percent, the same as late Wednesday. The dollar was lower against most other major currencies, while gold prices jumped.
Investors continued to place bets on the direction of interest rates. The Federal Reserve’s Beige Book, issued Wednesday, gave some investors pause after banking on a cut in the benchmark federal funds rate: The report suggested that while problems in the credit markets have exacerbated a housing market slump, the turmoil hasn’t damaged the broader economy. Stocks fell sharply, taking the Dow Jones industrials down more than 140 points.
Among the retailers to report August results Thursday, Wal-Mart said same-store sales, which measure business at stores open at least one year, rose 3.1 percent, while Target said same-store sales in August rose 6.1 percent.
The two biggest retailers beat Wall Street estimates. Wal-Mart rose 41 cents to $42.86, and Target rose 93 cents to $62.79.
Tony department store chain Saks Inc., teen apparel retailer Pacific Sunwear of California Inc. and children’s clothier The Children’s Place Retail Stores Inc. also topped analyst projections.
Though consumer spending still appears healthy, Wall Street remains worried about the troubled housing market.
Not only were investors worried about the rising foreclosure rate, but late Wednesday, mortgage lender Countrywide Financial Corp. said it will cut another 900 jobs nationwide after eliminating about 500 positions last month. The nation’s largest mortgage lender by volume employs about 60,000 people.
Countrywide fell 70 cents, or 3.6 percent, to $18.11.
The Russell 2000 index of smaller companies fell 4.48, or 0.57 percent, to 785.98.
Overseas, Japan’s Nikkei stock average rose 0.61 percent. In afternoon trading, Britain’s FTSE 100 fell 0.04 percent, Germany’s DAX index fell 0.21 percent, and France’s CAC-40 declined 0.27 percent.
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