Disappointing Jobs Data Drags Stocks Moderately Lower
With
traders reacting to disappointing jobs data, stocks have moved
moderately lower in early trading on Thursday. The major averages have
slipped into negative territory, more than offsetting the modest gains
posted in the previous session.
The major averages have not seen much follow-through on their initial downward move but remain firmly in the red. The Dow is down 38.90 points or 0.3 percent at 13,539.06, the Nasdaq is down 18.14 points or 0.6 percent at 3,164.48 and the S&P 500 is down 7.56 points or 0.5 percent at 1,453.49.
The
early weakness on Wall Street comes on the heels of the release of a
report from the Labor Department showing that jobless claims came in
above estimates in the week ended September 15th.
While jobless
claims edged down to 382,000 from the previous week's revised figure of
385,000, economists had expected jobless claims to drop to 373,000 from
the 382,000 originally reported for the previous week.
Peter Boockvar,
managing director at Miller Tabak, said, "Bottom line, the labor market
still can't gain any lasting traction in light of the obvious economic
challenges."
The downward momentum for stocks also comes on the
heels of the release of a report showing a continued contraction in
Chinese manufacturing activity.
Railroad stocks have shown a substantial move to the downside in early trading, dragging the Dow Jones Railroads Index down by 3.4 percent. Norfolk Southern (NSC) is leading the sector lower after warning of weaker than expected third quarter earnings.
Significant weakness has also emerged among brokerage stocks, as reflected by the 2 percent loss being posted by the NYSE Arca Broker/Dealer Index. Jefferies (JEF) is posting a steep loss despite reporting better than expected third quarter results.
Steel, oil service, and gold stocks have also come under pressure, moving to the downside along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness during trading on Thursday. Japan's Nikkei 225 Index dropped by 1.6 percent, while Hong Kong's Hang Seng Index fell by 1.2 percent.
The major European markets have also moved to the downside on the day. While the German DAX Index is down by 0.5 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 0.8 percent.
In the bond market, treasuries are
extending a recent upward move on the disappointing jobs data. As a
result, the yield on the benchmark ten-year note, which moves opposite
of its price, is down by 5.5 basis points at 1.727 percent.
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European Markets Fall On Data Amid Debt Worries
The European markets are
in negative territory in afternoon trading Thursday, as disappointing
data hurt investor optimism. The Asian markets fell across the board and
the U.S. index futures indicate a weak start.
Activity in
Eurozone's manufacturing sector decreased at a slower pace in September,
data released by Markit Economics showed. The seasonally adjusted
purchasing managers' index, or PMI, for the manufacturing sector rose to
a six-month high of 46 in September from 45.1 in August, but remained
below the no-change 50 mark that separates growth from contraction.
In Germany, the seasonally adjusted PMI for manufacturing rose to 47.3 in September from 44.7 in August.
The
French private sector shrank at the fastest pace since April 2009
driven by a marked decline in incoming new business, survey data from
Markit Economics showed. The flash composite output index fell to 44.1
in September from 48 in August.
U.K. retail sales,
including auto fuel, fell 0.2 percent month-on-month in August, data
from the Office for National Statistics showed. Economists had forecast a
0.3 percent drop.
European Central Bank Governing Council member Erkki Liikanen said
in an interview to newspaper Demokraatti that shareholders of banks
must be ready to take on more risk in banking operations without
burdening the government and the tax payers.
It is the task of
the shareholders and investors to ensure that the banks operate in such a
way as to avoid losses, Liikanen, who heads the Bank of Finland, said.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.91 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.38 percent.
The German DAX is declining 0.46 percent and the French CAC 40 is falling 0.79 percent. The UK's FTSE 100 is dropping 0.60 percent and Switzerland's SMI is losing 0.22 percent.
In Frankfurt, Commerzbank is
falling 2 percent and Deutsche Bank is losing 0.8 percent. Deutsche
Bank confirmed that it reached agreement to sell private bank unit
BHF-BANK to Kleinwort Benson Group, a unit of Belgium-based financial
services group RHJ International, for 384 million euros.
BMW and Daimler are notably lower. Volkswagen is down 0.2 percent. Daimler has said that it sees increasingly difficult market conditions in Europe.
EON and RWE are dropping 1.6 percent and 1.3 percent, respectively. Hawesko Holding is losing 1.5 percent. Berenberg started the stock with a "Hold" rating. Bucking the trend, department store operator Metro is advancing 1.7 percent and airline Lufthansa is climbing 1.5 percent.
Sky Deutschland is climbing 1.8 percent after Barclays initiated the stock with an "Overweight" rating. Sartorius is gaining 2.8 percent. Berenberg initiated the stock with a "Buy" rating.
In Paris, Total is declining 2.1 percent, thus topping the losers, amid falling oil prices. BNP Paribas, Societe Generale and Credit Agricole are declining between 2 percent and 1.3 percent. Insurer Axa is losing 1.4 percent.
Renault is dropping around 2 percent. Peugeot is
gaining 1.5 percent after it announced exclusive negotiations to sell
75 percent interest in its Gefco trucking unit to JSC Russian Railways
for 800 million euros. The sale is aimed at reducing debt.
EADS is up 1.4 percent and hotel group Accor is adding 1.1 percent.
Miners are notably lower in London. Rio Tinto, Eurasian Natural Resources, Antofagasta, Kazakhmys and BHP Billiton are declining between 2.6 percent and 3 percent. Russian steel maker Evraz is losing 3.8 percent.
Barclays is losing 1.5 percent and Royal Bank of Scotland is dropping 0.8 percent. Imperial Tobacco
is adding 1.2 percent. The company expects to report about 4 percent
rise in fiscal 2012 tobacco net revenues at constant currency.
ITV is climbing 2.8 percent and International Consolidated Airlines is gaining 1.9 percent.
Telenet is surging 12.4 percent in Brussels. Cable firm Liberty Global,
Inc. said it plans to launch a voluntary and conditional cash offer for
all Telenet Group Holding shares and other securities, thus giving
access to voting rights that it does not already own or that are not
held by Telenet.
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Asian Stocks Fall On Growth Concerns
Asian stocks
fell broadly on Thursday, with energy firms retreating across the
region after crude prices hit a six-week low in New York trading
yesterday, weighed down by comments from Saudi officials and on fears of
oversupply in the market.
Mixed U.S. housing data, continued
contraction in China's factory sector and a fall in Japan's exports for a
third consecutive month in the year to August also raised worries that
the ongoing growth slowdown could be more severe than meets the eye.
Commodities tumbled and the euro fell to a one-week low against the
dollar ahead of a Spanish bond auction later in the day.
Tokyo stocks fell
sharply on Thursday, weighed down by a stronger yen against both the
dollar and euro as the impact of the Bank of Japan's additional policy
easing was lost. The Nikkei average fell 1.6 percent, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 1.4 percent. Chinese-linked shares led the decliners, with Komtsu and Hitachi down about 3 percent each, while Canon, Sony and Tokyo Electron dropped 3-5 percent.
Heavyweight Fanuc dropped 1.9 percent, steel maker Nippon Steel fell 3.4 percent, oil firm Inpex tumbled 3.5 percent and shipping line Mitsui OSK
Lines retreated 3.7 percent. Domestic demand-related stocks gained
ground on defensive buying, with NTT Docomo up a percent, while Japan
Tobacco and Japan Airlines added about half a percent each. Ricoh rose 1.5 percent on a Nikkei report that it will raise its dividend for the year to March 2013 by 8 yen to 16.5 yen.
Chinese shares tumbled, with the benchmark Shanghai
Composite index losing over 2 percent to end at a more than
three-and-a-half year low as the lackluster PMI data pointed to broader
economic weakness and shrinking demand in both domestic and overseas
markets. Flash results of a survey by Markit Economics and HSBC revealed
that the purchasing managers' index (PMI) rose to 47.8 in September
from 47.6 in the previous month, suggesting shrinking manufacturing
activity for an 11th straight month. Hong Kong's Hang Seng index fell 1.2 percent.
Australian
shares ended firmly in the red, with China-exposed miners pacing the
decliners on the weak Chinese demand outlook. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index dropped about half a percent each. BHP Billiton fell 1.5 percent after it formally shelved a proposal to build a $3 billion coking coal mine in central Queensland. Rival Rio Tinto lost 2.1 percent. Fortescue Metals
dropped 2.4 percent after it settled a long-running dispute with U.S.
investment firm Leucadia National over a loan. Oil & gas firm Woodside fell 2.2 percent, Oil Search declined 1.3 percent and Santos tumbled 3.2 percent.
Among major banks, Commonwealth and Westpac slid less than a half percent each and NAB closed on a flat note, while ANZ
shares rose 0.8 percent. Brickworks shed half a percent after the
bricks and masonry supplier posted a 70 percent drop in full year
profit. Billabong shares plunged 7.3 percent after the troubled
surfwear retailer said one of two suitors interested in taking over the
group had dropped out of the race.
Seoul shares fell notably on concerns over the outlook for growth in China. The benchmark Kospi
average fell 0.9 percent, dragged down by profit taking in tech and oil
stocks. Market heavyweight Samsung Electronics fell 2 percent after
showing little change in the past three sessions. Energy stocks like S-Oil and SK Innovation
lost 3-4 percent after Saudi Arabia, the world's largest oil producer,
said it would pump about 10 million barrels per day of crude and produce
more if needed in an attempt to lower oil prices.
New Zealand shares
bucked an otherwise downtrend across Asia-Pacific region, after outdoor
clothing company Kathmandu Holdings said it expects an improved
performance in fiscal 2013 should conditions not deteriorate further.
Shares of the retailer jumped about 3 percent, helping lift the benchmark NZX-50 index up 0.6 percent.
Stock exchange operator NZX and utility Contact Energy
also rose sharply, gaining 2.7 percent and 2.1 percent, respectively,
while online auction site Trade Me, trucking and logistics company
Mainfreight and New Zealand Refining, operator of the country's only oil
refinery, fell between 0.8 percent and 3.5 percent. Heavyweight Telecom
rose 0.9 percent after the nation's largest listed company appointed
Chris Quin as chief executive of its retail division, effective Oct. 1.
Elsewhere, India's benchmark Sensex was down 0.6 percent, Indonesia's Jakarta Composite index was declining 0.7 percent, Malaysia's KLSE Composite shed 1.3 percent, Singapore's Straits Times eased 0.4 percent and the Taiwan Weighted average closed down 0.7 percent.
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Crude Extends Losses On Demand Concerns
The price of crude oil was
extending losses Thursday morning as trader fret over demand growth
after data revealed contraction in Chinese manufacturing activity.
The
HSBC Flash China PMI ticked higher in September from a reading of 47.8
in August. However, the HSBC Flash China Manufacturing Output Index hit a
10-month low of 47.
Light Sweet Crude Oil (WTI) futures for
November delivery, the most actively traded contract, shed $0.67 to
$91.63 a barrel. Yesterday, oil settled at a 6-week low after a weekly
oil report from the Energy Information Administration showed U.S. crude
stockpiles to have increased more than expected last week.
The weekly Energy Information Administration
oil report showed U.S. crude oil inventories to have increased more
than expected by 8.50 million barrels for the week ended September 14.
Analysts expected crude oil inventories to increase by 2.50 million
barrels for the week. Meanwhile, gasoline stocks dropped 1.40 million
barrels for the week, while analysts expected an increase of 1 million
barrels last week.
This morning, the U.S. dollar continued
to level off from its four-month low versus the euro and sterling. The
buck was moving lower against the yen, while ticking higher versus the
Swiss franc.
In economic news, activity in euro zone's
manufacturing sector decreased at a slower pace in September, data
released by Markit Economics showed. The seasonally adjusted purchasing
managers' index (PMI) for the manufacturing sector rose to a six-month
high of 46 in September from 45.1 in August, but remained below the
no-change 50 mark that separates growth from contraction. Economists
expected to index to rise to 45.5.
Separately, the Market Economics said
that Germany's manufacturing sector contracted further in September,
though at a slower rate. The seasonally adjusted purchasing managers
index (PMI) for the manufacturing sector rose to 47.3 in September from
44.7 in August, and hit the highest level in six months. The latest
contraction was the least marked since the current period of contraction
started in April.
Traders will look to the report on
weekly jobless claims from the U.S. Labor Department, due out at 8.30
a.m ET. Economists expect claims to decline to 373,000 from 382,000 in
the previous week.
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