DOW News - koolfriend4u
Dow News
DOW fell approx 0.8% today in the closing trade
NEW YORK (MarketWatch) -- Worries about employment and consumer spending weighed on stocks Thursday, although the market drew some support Bank of America's move to repay its federal bailout money.
New data on the U.S. service sector were surprisingly weak, reports on retail sales were mixed and the pending release of new jobs data on Friday loomed large. Against that backdrop, major indexes traded in a tight range Thursday afternoon. The Dow Jones Industrial Average was recently off 50 points at 10404, hurt by a 5% slide in component American Express to $39.
But Bank of America shares were up nearly 1% to $15.75 after the bank said it would repay $45 billion in aid from the Troubled Asset Relief Program. The bank is going to raise some of the money for the payment through a complex $18.8 billion stock sale.
Although new offerings effectively dilute existing shareholders, investors shrugged off that potential downside, viewing Bank of America's repayment of bailout money as confirmation of the U.S. financial system's recovery from last year's credit crisis.
"The thing about the big banks at this point is that they've seen so much competition go by the wayside that people are figuring the survivors will be able to put up pretty nice profits for awhile to come," said portfolio manager Eric Marshall, of Hodges Capital Management in Dallas.
Surprisingly weak service-sector data cooled some investors' confidence in a recovery Thursday. The Institute for Supply Management said its non-manufacturing index fell to 48.7 in November, down from 50.6 in October, worse than the 51.7 expected by economists and signaling a move from modest expansion to contraction in the U.S. manufacturing sector.
Traders said the report was particularly important ahead of Friday's nonfarm payroll report for November. Analysts expect the employment report to show a slowing pace of job losses compared to October, when U.S. nonfarm payrolls shed 190,000 jobs.
In a note to clients, Deutsche Bank economist Joe LaVorgna said he expects to see a decline of 90,000 jobs for November, slightly better than most analysts' expectations for a six-figure decline. In an interview, LaVorgna said a slower hemorrhaging of jobs in the U.S. economy should be enough to bolster consumer spending through the key holiday season, with recent increases in home sales and the value of stock portfolios helping to bolster Americans' spending power.
"If the holiday season isn't good it's only because there isn't a lot of inventory of goods to sell, it's not because people don't want to spend," said LaVorgna.
Shares in major retailers were mixed Thursday as several released same-store sales data. Limited Brands, the parent of Victoria's Secret, rose 2.7% to $18.25 and Kohl's rose 1% to $54.28 after each reported larger than expected gains in same-store sales for November.
On the downside was TJX, which tumbled 2.5% to $37.44 after reporting an 8% gain in November same-store sales that nevertheless missed Wall Street's hopes for a 9% rise. Most chains' reports coincided with initial surveys of holiday shopping suggesting higher traffic didn't necessarily translate into spending.
But December could see a pop: Consumers reported an average 42.2% of their shopping completed through the end of November, compared with 48.3% last year, according to an International Council of Shopping Centers and Goldman Sachs survey.
Trading was subdued ahead of the jobs release, the week's most awaited economic news. Composite volume in New York Stock Exchange-listed companies recently hit 3.8 billion shares, a below-average pace. The S&P 500 was off 0.4% at 1104, helped by modest gains in the telecommunications, technology, and utilities sectors. Financials fell 1.5% as a group, and energy was off 0.7% as oil prices fell for a second straight day. The Nasdaq Composite Index was recently down 0.7% to 2185. The Russell 2000 slipped 0.6% to 593.
"People at this point are positioning themselves for 2010, when the big story will be the consumer and jobs," said strategist Steve Wood, of Russell Investments. "On balance, I'd say the data we've seen recently have been positive, though they do confirm that the recovery we're having is going to be a lumpy one."
General Electric rose 3 cents to $16.10 after agreeing to sell its stake in NBC Universal to Comcast. The cable provider's shares rose 7.2% to $16. The dollar was mixed, strengthening against the Japanese yen but weakening compared to the euro. The U.S. Dollar Index slipped 0.1%. Treasury prices fell. The two-year note was down 1/32, yielding 0.738%. The 10-year note was off 20/32 to yield 3.386%.
