Dow backtracks for 5th day
Wall Street extended its decline Thursday, with the Dow index falling for a fifth straight session after the Labor Department said productivity was flat in the third quarter. Some disappointing retail sales reports also hurt market sentiment.
Gold jumped to an eight-week high, suggesting that some investors were taking shelter, fearful of further losses in stocks.
The outlook for the economy, a source of anxiety for many investors in recent days, may become clearer today, when the government reports on October employment.
Stocks ended mostly lower Thursday, although the selling was restrained compared with Wednesday’s session. The Dow industrials lost 12.48 points, or 0.1%, to 12,018.54, after sliding nearly 50 points the previous day.
The Nasdaq composite index, which tumbled 1.4% on Wednesday, was nearly flat Thursday, off 0.33 of a point to 2,334.02.
The Standard & Poor’s 500 eased 0.47 of a point to 1,367.34.
Losers topped winners by 5 to 4 on the New York Stock Exchange.
The Russell 2,000 small-stock index fell 0.3% after diving 1.9% the previous day.
This week’s reports on the economy have pointed to a more serious slowdown than many investors had expected, halting the stock market’s recent rally.
The productivity report Thursday was worrisome for another reason: It could translate into fresh inflation pressures if companies seek to raise prices because they’re no longer enjoying strong productivity gains.
The latest economic data “put the thought into people’s minds that the economy is slowing and inflation is going up,” said James Monaghan, head trader at AIG SunAmerica Asset Management in Jersey City, N.J.
However, Dallas Federal Reserve President Richard Fisher said in a speech Thursday that although overall inflation remained high, it was possible that price pressures had peaked and were “finally heading lower.”
The Fed’s view of inflation is crucial, of course, because the central bank could feel compelled to raise interest rates again if it was worried that price pressures could accelerate.
The October employment numbers today will be reviewed intently by the Fed, which wants the economy to slow to damp inflation but doesn’t want growth to decelerate so fast that recession becomes a risk.
Treasury bond traders who had pushed yields lower in recent days, betting on a weaker economy, were on edge Thursday. The 10-year T-note yield ended at 4.60%, up from 4.56% on Wednesday.
In other markets, near-term crude oil futures resumed their retreat, falling 83 cents to $57.88 a barrel on the New York Mercantile Exchange.
Gold futures jumped $8.80 to $625.40 an ounce in New York, the highest close since Sept. 6. Gold has rallied 10% since early October.
Among the day’s market highlights:
* Retail shares sliding on disappointment over October sales numbers included Wal-Mart Stores, down 56 cents to $48.29; Federated Department Stores, down $1.68 to $41.35; Ann Taylor, down $1.71 to $40.20; and Gap, off $1.14 to $19.50.
But J.C. Penney jumped $1.80 to $76.93. And Los Angeles-based Guess shot up $7.39 to $64.02 one day after reporting sharply higher quarterly earnings.
* Shares of real estate investment trusts, a star sector this year, fell sharply. Mack Cali slid $2.27 to $50.18, Vornado Realty lost $2.39 to $116.70 and SL Green Realty tumbled $3.12 to $117.10.
* Among companies reporting quarterly earnings Thursday, Pasadena-based IndyMac Bancorp rose $1.20 to $46.07 and financial research firm Morningstar soared $2.84 to $42.71.
But battery maker Energizer Holdings slumped $4.80 to $72.85 after reporting results that missed expectations. The company said it would raise prices in January to make up for rising metal costs.
* The tech sector got a boost from Dell, which rose 78 cents to $24.80, its highest closing price since June. Wall Street analysts have been sounding more positive about the computer company’s near-term outlook.
Some Internet-related issues also attracted interest. EBay gained $1.11 to $32.54 and Yahoo was up 54 cents to $26.53.
* Canada’s stock market stabilized after diving on Wednesday, following the government’s decision to start taxing so-called income trusts. The main Toronto share index rose 0.7% after plunging 2.4% in the previous session.
* European stock markets were mostly lower after the European Central Bank left its key interest rate unchanged at 3.25% but again signaled it was likely to raise rates in December. The German and French markets both fell 1.1%.
