Stocks Flop as U.S. and Eurozone Show Weakness
NEW YORK (TheStreet) -- Major U.S. stock markets stumbled Thursday on lackluster economic data from the eurozone and softer-than-expected results from the latest U.S. economic indicators.
The euro retreated on worries that Cyprus's financial crisis could compound Europe's debt crisis, and U.S. home re-sales rose less than forecast.
The markets' response to a less-than-expected rise in claims for U.S. unemployment benefits was muted, and investors showed little reaction to reports from the Philadelphia Federal Reserve Bank's Business Outlook Survey and Conference Board's Index of Leading Indicators that pointed to improving economic growth.
The S&P 500 declined 0.83% to 1,545.80.Shares of computer services company Oracle (ORCL) plummeted 9.6% to $32.32 on Thursday, making the stock one of the worst performers on the S&P. Oracle shares retreated on the heels of a fiscal third-quarter miss on sales and profits, which took a hit from businesses moving into cloud services from servers. The Nasdaq slumped 0.97% to 3,222.60 while the Dow Jones Industrial Average fell 0.62% to 14,421.49. European markets slid and the euro declined 0.29% on the dollar as contagion risks increased on Cyprus's struggles to secure a bailout amid signs of a deepening Euro-area recession. The FTSE 100 in London slipped 0.69% and the DAX in Germany stumbled 0.87% after Markit Economics said an initial reading on a survey of purchasing managers in the services and manufacturing industries revealed that Europe's economic downturn intensified for a second month in March. Markit also reported that German private sector output slowed this month the most in 2013. The U.S. Labor Department said initial jobless claims rose 2,000 in the week ended March 16 to 336,000, from an upwardly-revised 334,000 the prior week. That was less than the 342,000 expected by economists. In housing news, the National Association of Realtors said existing home sales rose to a seasonally adjusted annual rate of 4.98 million units in February from an upwardly-revised 4.94 million-unit rate in January. That was less than expectations for an increase of 5 million units in February. The Philadelphia Federal Reserve Bank's Business Outlook Survey for March showed an improvement in manufacturing conditions to 2 from a contraction of 12.5, which was better than the decline of 2 predicted by economists. And the Conference Board's Index of Leading Indicators rose 0.5% in February after increasing by an upwardly-revised 0.5% in January, exceeding expectations for a 0.4% rise. The benchmark 10-year Treasury rose 10/32, diluting the yield to 1.927%, as the dollar shed 0.05%, according to the U.S. dollar index. May crude oil futures fell $1.05 to settle at $92.45 on the New York Mercantile Exchange. Yahoo! Inc. (YHOO) was among the top performers on the S&P on Thursday. The largest U.S. Web portal added 3.5% to $22.87 after Oppenheimer analyst Jason Helfstein upgraded the stock to "outperform" from "perform" at Oppenheimer and raised his price target to $27 from $22 a share, driven by the current higher trading value for shares of Yahoo! Japan, the joint venture between Yahoo! and Japan's SoftBank; the assumption that Chinese concern Alibaba, in which Yahoo has a minority stake, will complete its initial public offering within the next 12 months at a $77 billion valuation; and a 2013 EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate that's 2% above the consensus on higher search revenues from toolbar and application providers. Juniper Networks Inc. (JNPR) lost 2.2% to $18.89 and Cisco Systems (CSCO) shed 3.8% to $20.84 after both networking equipment companies were downgraded by FBR Capital analyst Scott Thompson. Cisco was cut to "underperform" from "market perform" as the analyst predicted reduced demand for routers, switches and networking technologies as new networking technologies emerge. Juniper was reduced to "underperform" from "market perform" for similar reasons. Markit said the "flash" Germany Composite Output Index sank to a three-month low of 51 in March from 53.3 in February. The flash Germany Manufacturing Output Index contracted to 49.8, a three-month low, from 50.7. Its preliminary estimate on the Eurozone PMI Composite Output Index fell to a four-month low of 46.5 from 47.9 in February. The flash Eurozone Manufacturing PMI Output Index declined to a three-month low of 46.5 from 47.8. On Thursday, the European Central Bank gave Cyprus an ultimatum of a Monday deadline for finding a solution to raising €5.8 billion in funds to meet requirements under a €10 billion European bailout package after the Cypriot parliament rejected the proposal for levies on Cyprus bank accounts. As of now, the Cypriot government has agreed to draw up an "investment solidarity fund" to recapitalize the banking sector as it seeks a €5 billion loan from Russia. Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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