Stocks' Early Gains Give Way to Losses
Updated from 12:45 p.m. EDT
U.S. stocks were drooping after a brief rally Thursday, as the string of erratic sessions that has become routine for the major averages continued.
The
Dow Jones Industrial Average
was down 96 points to 8423, and the
S&P 500
was losing 17 points to 880. The
Nasdaq
was dropping 46 points to 1568. The Dow started slow, then gathered steam and rose more than 200 points before retreating.
On Wednesday, stocks sold off steadily as many companies, citing an impending economic downturn, cautioned investors not to expect much in coming months.
The new day's economic data lent support to U.S. companies' cautious prognostications. The Department of Labor's jobless numbers for the week ended Oct. 18 unexpectedly rose by 15,000 to 478,000. Economists were expecting 468,000 unemployment claims for the week.
In addition, home foreclosures were up 71% year over year to 766,000 for the third quarter as home prices declined, according to
. Separately, the Federal Housing and Finance Agency said its home price index slipped 0.6% from July to August and fell 5.9% year over year.
As the economic outlook worsened, the government looked ready to aid homeowners. The Bush administration is mulling a $40 billion program to prevent
, according to a report in
The Wall Street Journal
.
Speaking before Congress, former
Federal Reserve
Chairman
Alan Greenspan
said that the financial crisis was a once-in-a-century event and admitted his oversight of financial markets during his tenure had been flawed.
News from large U.S. firms was corroborating the pessimism. The
Journal
reported that
(GS) - Get Report
is planning on cutting its workforce by 10% as it copes with the credit crunch.
General Motors
(GM) - Get Report
announced it would also
more workers and temporarily cut employee benefits in an effort to cut costs. Fellow automaker
Chrysler
said it would close a plant in Newark, Del., and eliminate a shift at a plant in Ohio as it sheds 1,800 workers.
Another day of earnings produced a mixed bag of quarterly results. In forecasting future results some companies were timid, while others showed more optimism in the face of a likely downturn.
During this week of earnings season, stocks typically trade in sectors on a single company's earnings, said Marc Pado, U.S. market strategist at Cantor Fitzgerald. He said that as additional reports roll out next week, stocks will begin trading more in line with their individual results.
Pado also said companies often strive to lower investor expectations during the third quarter so that they can end the fourth quarter on a high note. "You're seeing, across the board, all these companies are really setting the bar low."
Although the market doesn't look to spend much time below the lows achieved earlier this month, "we could very well be in for a year-long consolidation," said Pado.
Following Wednesday's close, online retailer
(AMZN) - Get Report
beat estimates, but the company lowered its forecast for the fourth quarter.
In the biotech arena,
(AMGN) - Get Report
announced solid earnings and lifted its forward guidance.
Ahead of the new session, fellow biotech firm
Celgene
(CELG) - Get Report
announced a 251% increase in profit, trumping Wall Street's expectations. Pharmaceutical company
Eli Lilly
(LLY) - Get Report
swung to a loss on charges related to a government probe into its Zyprexa drug.
Among chemicals companies,
Dow Chemical
(DOW) - Get Report
said third-quarter earnings rose as sales jumped 13%. Fertilizer concern
Potash
(POT)
likewise saw earnings surge in its most recent quarter.
Electronics maker
(SNE) - Get Report
slashed its fiscal 2009 outlook in half in part because a strengthening yen would hurt currency conversions from overseas sales.
Shipping concern
UPS
(UPS) - Get Report
, meanwhile, reported earnings that beat analysts' estimates but warned of challenges in coming quarters.
Cigarette maker
Altria
(MO) - Get Report
said that its profit declined 67% year over year, but on an adjusted basis the company beat estimates.
Stocks earlier enjoyed an upswing led by the energy sector. Integrated oil firms
Chevron
(CVX) - Get Report
and
ExxonMobil
(XOM) - Get Report
had led a rally in the Dow and were lately up more than 6%.
Crude oil futures were lately gaining $2.01 to $68.76 a barrel.
"Right now it looks like we're seeing a bit of a reaction to yesterday's selloff," said Darin Newsom, senior commodities analyst at DTN. He said that the move higher for oil futures and energy stocks may be short-covering ahead of an OPEC meeting on Friday, during which the cartel is expected to cut production.
However, the larger issue is demand, said Newsom. "There's something like 20 countries listed in a recessionary category at this time. ... It's going to take more to turn the oil industry, oil futures, oil stocks around in the long term," he said.
Longer-dated U.S. Treasury securities were rising in price. The 10-year was up 15/32 to yield 3.54%, and the 30-year was up 1-18/32, yielding 3.97%. The dollar was gaining on the pound and euro but softening vs. the yen. Gold was down $14.10 to $721.10 an ounce.
Overseas, European exchanges were mixed, as the FTSE in London worked higher while the Dax in Frankfurt was taking losses. In
, Japan's Nikkei and Hong Kong's Hang Seng closed on the downside.
