Friday, January 7, 2011

Retailers hold down stocks ahead of jobs data

NEW YORK: Stocks slipped on Thursday, Jan 6 as soft retail sales and a sharp rise in the dollar left investors edgy a day before December's U.S. employment report.

Given a rise of about 8 percent in the S&P 500 since the start of December, investors could be looking for an excuse to sell stocks if the jobs report falls short of forecasts that were raised after Wednesday's strong private-sector payroll report.

"If tomorrow's payroll numbers don't live up to expectations, that could create the correction that some have been predicting," said Paul Radeke, vice president at Minneapolis-based KDV Wealth Management.

Investors expect a gain of 175,000 in overall non-farm payrolls in December and a decline in the unemployment rate to 9.7 percent from 9.8 percent.

Several big retailers missed estimates in their December comparable sales, news that weighed on consumer shares. Target Corp (TGT.N) fell 6.8 percent to $54.91 and Gap Inc (GPS.N) was 6.9 percent lower at $20.70.

The S&P retail index .RLX lost 1.6 percent while the S&P consumer discretionary sector .GSPD fell 0.7 percent.

The weakness "was both surprising and disturbing," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. "It makes me think it had more to do with weather than fundamentals."

The U.S. dollar rose 0.7 percent, helping send crude prices down 2.2 percent. Oilfield services company Halliburton Co (HAL.N) dropped 3 percent to $38.22 while U.S. Steel Corp (X.N) shed 2.5 percent to $59.06.

"Demand for commodities should continue to improve, but in the short term there's a negative correlation between the dollar and commodities," Todd said. "That's hard to escape on a day-to-day basis."

The Dow Jones industrial average .DJI was down 25.65 points, or 0.22 percent, at 11,697.24. The Standard & Poor's 500 Index .SPX was down 2.71 points, or 0.21 percent, at 1,273.85. The Nasdaq Composite Index .IXIC was up 7.69 points, or 0.28 percent, at 2,709.89.

The Nasdaq was buoyed by Nvidia (NVDA.O), which surged 14 percent to $19.33 on optimism over a new mobile chip.

Also among Nasdaq gainers was Microsoft Corp (MSFT.O), which rose 2.9 percent to $28.82 after it took a step away from its alliance with Intel Corp (INTC.O) to team up with Britain's ARM Holdings (ARM.L) in the tablet and smart phone arena. Intel fell 0.8 percent to $20.77.

Telecommunications shares were among top drags on the Dow, with AT&T (T.N) down 1.4 percent at $29.15 and Verizon Communications (VZ.N) off 2.6 percent to $36.23.

New jobless claims rose more than expected in the last week, though the four-week average dropped to its lowest in more than 2 years.

About three stocks fell for every two that rose on the New York Stock Exchange while on the Nasdaq about five stocks fell for every four that rose.

About 8.39 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion. - Reuters

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