Stocks Lose Ground on Downbeat Data
NEW YORK (
) -- Stocks took a step back Thursday after the latest reads on Philly-area manufacturing and initial jobless claims heightened fears of a stalled recovery, overshadowing news that
Intel
(INTC) - Get Report
plans to buy
McAfee
( MFE) for $7.7 billion.
The
Dow Jones Industrial Average
lost 144 points, or 1.4%, to 10,271. The
S&P 500
shed 19 points, or 1.7%, to 1,076 and the
Nasdaq
declined by 37 points, or 1.7%, at 2179.
McAfee's stock soared nearly 60% to $47.01 on news that Intel plans to buy the security technology company for $7.68 billion, or $48 a share. The offer represents a significant premium to McAfee's closing price of $29.23 a share on Wednesday. Intel's stock finished Thursday's session 3.2% lower at $18.96.
Daniel Penrod, senior industry analyst at the California Credit Union League, said the Intel deal was likely serving as a ray of hope amid the morning's influx of weaker-than-expected data.
"I don't think there's any one piece of data that's weighing more than others because I think the market is looking at things more holistically. However, I do think the market is concerned by manufacturing at this point and looking to see whether the excess is being picked up so that we can move towards job growth."
"Originally during the downturn, the market was looking at housing and then shifted to look more closely at the unemployment numbers. Now I think the shift is more to retail and manufacturing to see where we're headed," Penrod said, adding, "The hope is that we'll see a back-to-school bump."
Overseas on Thursday, Hong Kong's Hang Seng inched 0.2% higher while Japan's Nikkei jumped 1.3%. The FTSE in London shed 1.7%, and the DAX in Frankfurt lost 1.8%.
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The Economy
Initial weekly jobless claims unexpectedly rose by 12,000 to 500,000 in the week ended Aug. 14. Economists had been expecting the level to drop to 475,000 from last week's initially reported claims of 484,000, according to
Briefing.com
.
|
The Conference Board said leading indicators inched 0.1% higher in July after slipping 0.3% in June. The growth was milder than the 0.2% uptick that economists had been expecting, according to
Briefing.com
.
"The indicators point to a slow expansion through the end of the year," said Ken Goldstein, economist at the Conference Board, in a statement. "The good news is that the data do not point to a recession."
Meanwhile,
manufacturing activity in the Philadelphia region weakened significantly in August as the Philadelphia Fed's index fell to a negative 7.7 reading after July's positive level of 5.1. Expectations were for a positive reading of 7.5.
The Energy Information Administration said natural gas storage levels grew by 27 billion cubic feet in the week ended Aug. 13, which was lower the increase of 28 billion to 32 billion cubic feet that analysts polled by Platts had been expecting.
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Company News
After the closing bell, a
cadre of tech sector players announced quarterly results.
Dell
(DELL) - Get Report
bested Wall Street projections on both the top and bottom-lines, earning 32 cents a share on $15.53 billion in sales. The stock traded 1.2% lower at $12.04, and continued losing ground in after-hours trading.
Hewlett-Packard
(HPQ) - Get Report
confirmed its previously announced headline figures after the closing bell, as analysts awaited the third-quarter conference call after Thursday's closing bell. The company
preannounced earnings of $1.08 a share on sales of $30.7 billion on Aug. 6 when it announced the resignation of CEO Mark Hurd. Shares lost 1.5% at $40.76 during the regular period.
Marvell
(MRVL) - Get Report
said its second quarter revenue rose 40% to $896 million, which was a little lighter than expected, while its adjusted earnings of 40 cents a share landed right in-line with estimates. The firm also announced a $500 million buyback.
Teen retailer
Aeropostale
(ARO)
reported late, falling short of sales and outlook expectations.
Gap
(GPS) - Get Report
topped profit forecasts by a penny following the end of the session, reporting earnings of 36 cents a share, though the retailer also offered notice of rising inventories.
Conglomerates, capital goods and transportation sectors led losses Thursday with Intel,
General Electric
(GE) - Get Report
, and
Alcoa
(AA) - Get Report
serving as the Dow's biggest laggards. All components finished in the red, though
IBM
(IBM) - Get Report
and
McDonald's
(MCD) - Get Report
showed the mildest declines.
Starting Aug. 22,
banks and credit card companies will have to include further measures to avoid customer credit card abuses. Shares of banks with large credit card businesses like
JPMorgan Chase
(JPM) - Get Report
,
Bank of America
(BAC) - Get Report
and
Wells Fargo
(WFC) - Get Report
lost more than 2% each today.
Capital One's
(COF) - Get Report
stock shed 3.7%, to $37.61.
Shares of
Caterpillar
(CAT) - Get Report
dropped 0.7% at $69.29 after the company released monthly sales data showing that global retail sales of its core rolling machinery jumped 32% year over year for the period between June 10 and July 10.
McDonald's said it raised $29.4 million through yuan-denominated bonds in Hong Kong. The stock lost 0.4% to $72.97.
Sears
(SHLD)
narrowed its loss in the second quarter but sales of $10.5 billion were slightly lower than what Wall Street was looking for. The stock shed 9.1% at $61.11.
Staples
(SPLS)
met analysts' estimates with an adjusted second-quarter profit of 20 cents a share. The office retailer also said it expects third-quarter sales to rise in the low single digits with adjusted earnings projected in a range of 39 to 40 cents a share. It sees full-year earnings of $1.25 to $1.29 a share. Shares slipped 3.5% to $18.97.
Shares of
GameStop
(GME) - Get Report
lost 8.2% at $19.06 after the company missed its consensus earnings target by a penny with a second-quarter profit of 26 cents a share and issued disappointing guidance for the second-half of the year.
Research In Motion
( RIMM) is looking to pick up a mobile advertising network, according to the
Wall Street Journal
. The stock was off by 0.5% at $50.46.
MasterCard
(MA) - Get Report
agreed to acquire
DataCash Group
, a European payments service provider, for around $520 million. MasterCard's stock finished 1.9% lower at $208.89.
BP
(BP) - Get Report
successfully capped the Macondo well but pushed the date of the relief well operation back to Sept. 6. The stock lost 2.8% at $36.24.
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Commodities and the Dollar
Following the EIA report, the September
natural gas contract traded 7 cents lower to finish at $4.17 a gallon. Meanwhile, crude oil for September delivery lost 99 cents, to $74.43 a barrel. The more actively traded October contract settled at $74.77 a barrel after losing $1.01.
Elsewhere in commodity markets, the December gold contract settled up by $4 at $1,235.40 an ounce.
The dollar was trading higher against a basket of currencies, with the dollar index up by 0.3%.
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Treasuries
The benchmark 10-year Treasury was up by 18/32, lowering the yield to 2.573%.
The two-year note was higher by 1/32, diluting the yield to 0.488%. The 30-year bond was up by 1 20/32, weakening the yield to 3.649%.
--Written by Melinda Peer and Sung Moss in New York
.
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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
