|BEGINSUB|Stocks Close Lower On Weak Economic Data – U.S. Commentary|ENDSUB|
Wall Street ended Thursday’s session substantially lower after an index on manufacturing activity showed continued weakness. The disappointing data has fueled concerns regarding the health of the economy.
The Philadelphia Federal Reserve released its regional index of activity in the manufacturing sector for the month of February earlier in the day. The index fell to a negative 24.0 in February from a negative 20.9 in January, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to rebound to a reading of negative 10.0.
The report also showed that the outlook for manufacturing growth over the next six months deteriorated further, with the future general activity index falling to a negative 16.9 in February from a positive 5.2 in January. With the decrease, the future general activity index turned negative for the first time since January of 2001 and hit its lowest level since 1990.
The major averages fell to their worst levels in the last few minutes of trading, although they were able end the day on an uptick. The Dow closed down 142.96 points or 1.2 percent at 12,284.30, the Nasdaq closed down 27.32 points or 1.2 percent at 2,299.78 and the S&P 500 closed down 17.50 points or 1.3 percent at 1,342.53.
Sector News
Oil service stocks turned in some of the worst performances, pressured by a drop in oil prices. The Philadelphia Oil Service Index ended the day down 2.8 percent, pulling back off its monthly closing high set on Wednesday.
Crude oil eased away from the century mark on Thursday after the weekly inventory report showed another increase in supplies. Light sweet crude closed at $98.23 a barrel, down $1.47, on the first day with April as the front-month contract. The March contract expired after closing Wednesday's session at a record $100.74 a barrel.
Airline stocks saw significant selling pressure despite the drop in the price of oil. Investors had hoped for an announcement of a merger between Delta Air Lines
(DAL) and Northwest Airlines
(NWA). The Amex Airline Index closed 2.4 percent lower.
Real estate stocks also saw substantial declines, with the Morgan Stanley REIT Index ending the session down 2.3 percent. Among real estate stocks, Pennsylvania Real Estate Investment Trust
(PEI) and General Growth Properties
(GGP) were the biggest losers, dropping 5.6 percent and 4.5 percent respectively.
Natural gas, bank, utility and defense stocks also posted notable losses. The Amex Natural Gas Index closed down 2.3 percent, pulling away from the record closing high set on Wednesday.
On the other hand, wireless stocks ended the day modestly higher, with the Amex Wireless Index closing up 0.9 percent. Research In Motion
(RIMM) led the index higher after it raised its subscriber additions forecast for the fourth-quarter. The stock closed up 9 percent.
Dow Components
The Dow components saw significant weakness on Thursday, causing the blue chip index to end the session sharply lower. Of the 30 stocks that make up the Dow, only 3 stocks closed higher.
General Motors
(GM) was one of the biggest losers within the Dow, closing down 4.9 percent. Earlier in the session, GMAC LLC, which is partly owned by GM, revealed that it would cut hundreds of jobs within its auto finance business. Additionally, the general weakness in the economy weighed heavily on the automaker.
Boeing
(BA) also saw significant selling pressure despite a $2.5 billion order from Continental Airlines
(CAL). Earlier in the day, Continental announced that it has ordered 27 more planes from Boeing to replace older, less efficient aircraft and to pursue growth opportunities. Shares of Boeing ended the session down 2.4 percent, adding to a loss posted in the previous session.
DuPont
(DD) posted a sharp loss as well. The chemical maker closed down 1.9 percent, reversing the gains posted in the past two days. On Wednesday, DuPont backed its previous 2008 guidance, which marked the second time it backed its full year guidance since the start of the year.
Merck
(MRK) also saw a considerable decline, closing down 1.9 percent. Other stocks that fell notably lower include Bank of America
(BAC), Chevron
(CVX) and Citigroup
(C).
On the other hand, Verizon
(VZ) and AT&T
(T) saw modest gains. Verizon closed 0.3 percent higher and AT&T closed up 0.3 percent. Both stocks had seen recent weakness on fears of an imminent price war. Wal-Mart
(WMT) also closed higher, ending the session up 0.2 percent.
Other Markets
In overseas trading, the major Asian markets were mostly higher, with the exception of the Chinese and Malaysian markets. The positive sentiment followed the strong close on Wall Street overnight. Japan’s Nikkei 225 average saw buying interest pick up in the afternoon, pushing the index up 2.8 percent at its close.
The major European markets also closed mostly higher. The German DAX Index closed up 0.1 percent, the French CAC 40 Index closed up 1 percent and the U.K.’s FTSE 100 Index closed up 0.7 percent.
Meanwhile treasuries closed significantly higher after several key economic reports reignited recession fears. The yield on the benchmark ten-year note ended the session down 13.3 basis points at 3.784 percent.
Looking Ahead
While there are no economic reports set to be released on Friday, Dallas Federal Reserve Bank President Richard Fisher will be speaking in the afternoon to the Petroleum Club of Fort Worth in Texas.
There are several companies that are expected to report their earnings after the market closes on Thursday. Some of these companies include Chesapeake Energy Corporation
(CHK), Morningstar
(MORN) and Intuit
(INTU).
|BEGINSUB|European Markets Rise On Strong Earnings, Buoyant Miners – European Commentary|ENDSUB|
The European markets rose on Thursday, as upbeat earnings from companies such as Nestle and Shire lifted investor sentiments and rising commodity prices triggered a rally among mining stocks.
The benchmarks pared some of their gains after a Philadelphia Federal Reserve report showed that manufacturing in the Philadelphia region contracted more than economists expected, reaching the lowest level since the eve of the last recession.
The Philadelphia Federal Reserve said its regional index of activity in the manufacturing sector fell to a negative 24.0 in February from a negative 20.9 in January, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to rebound to a reading of negative 10.0.
In a separate report, the Conference Board in the U.S. said its leading index for January fell compared to the previous month due to negative contributions from stock prices and housing permits. The report showed that the leading index fell 0.1% in January following a revised 0.1% decrease in December. Economists had expected the index to fall 0.1% compared to the 0.2% decrease originally reported for the previous month.
Back in Europe, U.K. retail sales rose the most in 11 months in January, beating predictions, the country's Office for National Statistics said.
Crude for April delivery fell $0.23 to $99.47 a barrel on the New York Mercantile Exchange, by the time the European markets closed, after a U.S. government report showed that the nation's crude oil supplies rose more than expected last week.
The FTSEurofirst 300 index of pan-European blue chips closed 0.7% higher at 1,330.