Wall Street retreats on jobless numbers
NEW YORK » Wall Street retreated again yesterday after readings on jobs and manufacturing - the first reports for the third quarter - indicated that businesses and workers still face a tough economy. The major indexes ended a turbulent week narrowly mixed.
A massive quarterly loss at General Motors Corp. and rising oil prices also gave investors reason to trade cautiously. But the market was considerably calmer than the first four sessions of the week, when the Dow Jones industrials rose or fell by triple digits each day in response to economic data or news about the financial sector.
Yesterday's reports were not as poor as many analysts had anticipated, which likely accounted for the muted reaction. Nonetheless, they portrayed an economy that was still sagging as it entered the second half of the year. The U.S. Labor Department said jobs fell for the seventh straight month in July and the unemployment rate rose to
5.7 percent. The report arrived after data Thursday that showed an unexpected jump in jobless claims to a five-year high.
Meanwhile, the Institute for Supply Management said manufacturing activity was flat in July.
The Dow fell 51.70, or
0.45 percent, to 11,326.32. The Dow ended the week down 0.39 percent.
The Russell 2000 index of smaller companies rose 1.62, or 0.23 percent, to 716.14.
Broader stock indicators also lost ground yesterday. The Standard & Poor's 500 index fell 7.07, or 0.56 percent, to 1,260.31, and the Nasdaq composite index fell 14.59, or 0.63 percent, to 2,310.96.
Advancing issues, however, narrowly outnumbered decliners yesterday on the New York Stock Exchange, where volume came to a light 1.22 billion shares.
The S&P finished the week up 0.21 percent, and the Nasdaq finished up 0.02 percent.
Bond prices edged higher in yesterday's trading. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to
3.94 percent from 3.95 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
However, most financial stocks performed well yesterday, with investors are cautiously optimistic that banks and other financial services companies - while still losing money on their hefty investments in troubled debt - are starting to clean up their books.
Bond insurer Ambac Financial Group Inc. said it agreed to pay $850 million to settle one of its largest exposures to risky debt instruments called collateralized debt obligations. Ambac rose $1.27, or 50 percent, to $3.79, while rival MBIA Inc. rose $1.74, or 29 percent, to $7.67.
Other gainers included Dow component American International Group, up 74 cents, or
2.8 percent, at $26.79; Wachovia Corp., up $1.71, or 9.9 percent, at $18.98; and Lehman Brothers Holdings Inc., up $1.31, or 7.6 percent, at $18.65.
Most companies' quarterly results have been surpassing Wall Street's forecasts. And beyond financial and consumer discretionary sectors, corporate earnings have been increasing.
Meanwhile, a few pharmaceutical stocks suffered sell-offs yesterday. Biogen Idec Inc. and Elan Corp. PLC fell due to safety concerns related to multiple sclerosis therapy Tysabri. Biogen dropped $19.75, or 28 percent, to $50.01, and Elan tumbled $10.12, or 50 percent, to $9.93.