Many investors mark time
Wall Street finished a quiet session modestly higher Thursday as investors awaited today’s government report on employment, hoping it would strike a balance between steady growth and room for more interest-rate cuts.
Many on Wall Street expect the Labor Department report to show a rebound from August and include revisions to that month’s dismal numbers. August’s job report showed a decline in payrolls -- economists had expected an increase -- and sent the Dow Jones industrial average down nearly 250 points the day it was released. Since then, the Federal Reserve has lowered its benchmark interest rate and the Dow has bounced back to where it was in mid-July, before the credit markets tightened up and caused stocks to fall sharply.
The employment numbers are considered important because this year’s relatively stable job market has served as a prop for the economy by offsetting the effects of the housing slump.
“If the report continues to be soft, that’s going to suggest more easing coming our way,” said Alan Gayle, senior investment strategist at Trusco Capital Management.
Although stock investors hope the Fed will lower rates again when it meets Oct. 30-31, they don’t want the job market to weaken. When people don’t have incomes, they tend to trim spending and can fall behind in paying their bills.
“A relatively strong employment report will be good news for stocks in that it will help support profit growth,” Gayle said. “Obviously Fed rate cuts are good, but more earnings is always the best.”
On Thursday, the Labor Department said initial jobless claims rose 16,000 to 317,000 in the week ended Sept. 29, a bigger jump than analysts anticipated. Meanwhile, the Commerce Department reported that orders to U.S. factories fell in August by 3.3%, slightly worse than expected and the largest amount in seven months. Although the activity reflected in the report predates the Fed’s rate cut, it still shows the degree to which the economy has been struggling.
The Dow edged up 6.26 points Thursday to 13,974.31 after shooting to a record high Monday and giving back a large chunk of that gain Tuesday and Wednesday.
Broader stock indicators rose somewhat more sharply Thursday. The Standard & Poor’s 500 index rose 3.25 points, or 0.2%, to 1,542.84, and the Nasdaq composite index advanced 4.14 points, or 0.2%, to 2,733.57.
The Russell 2000 index of smaller-company stocks rose 3.00 points, or 0.4%, to 829.15.
Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume was light.
Bond yields fell. The benchmark 10-year Treasury note’s yield slipped to 4.51% from 4.56% Wednesday.
The dollar fell against most major currencies, pushing gold higher.
Oil prices rose for the first time in four days as investors weighed whether supplies were adequate to meet demand. Crude futures rose $1.50 to settle at $81.44 a barrel on the New York Mercantile Exchange.
Among the day’s market highlights:
* Home builders snapped a three-day advance, falling 3.1% as a group, after UBS Investment Bank said the worst wasn’t over for the industry. Lennar, the largest U.S. home builder by sales, dropped $1.48, or 5.7%, to $24.34. No. 2 D.R. Horton slipped 42 cents, or 2.8%, to $14.39.
* Merrill Lynch fell $1.22, or 1.6%, to $74.78 after a CIBC World Markets analyst cut her third-quarter earnings estimate for the company, saying the summer’s credit-market tumult would erase $3 billion from the investment bank’s revenue.
* A Citi Investment Research analyst called mortgage-finance giant Fannie Mae and MGIC Investment, the biggest U.S. insurer of home loans, “buying opportunities” because they have “sound businesses and adequate liquidity and capital to manage through the tougher times.” Fannie Mae rose $1.35, or 2%, to $67.39. MGIC advanced 68 cents, or 2%, to $34.82.
* Sprint Nextel climbed 52 cents, or 2.8%, to $19.28 after the Wall Street Journal reported that activist shareholder Ralph Whitworth said he had lost confidence in Chief Executive Gary Forsee and wanted the company to consider selling some operations. The paper later reported on its website that Sprint’s board was looking for a new CEO and hoped to name one by December.
* Sears Holdings gained $3.12, or 2.3%, to $141.40 after hedge-fund manager William Ackman said he purchased 5 million shares of the company. He didn’t say why he bought the shares.
* Marriott International fell $2.04, or 4.6%, to $42.28 after the hotel firm said profit next year would be less than Wall Street projected.
* NutriSystem plunged $15.98, or 34%, to $31.59 after the weight-loss company said preliminary profit for the three months ended Sept. 30 was 62 cents to 66 cents a share, less than the 77 cents to 82 cents forecast in July.
* Overseas, key stock indexes fell 0.1% in Germany, 0.6% in Japan and 1.8% in Hong Kong. Shares rose 0.2% in Britain and edged lower in France.
