High oil prices and a wary skittishness among traders keeps the pressure on stocks going into Thursday's session.
Weekly jobless data, reported at 8:30am ET, is the big number ahead of Thursday's bell. The Philadelphia Fed survey and leading indicators are released at 10am.
Wednesday's market was another sloppy day, as traders had warned. The Dow finished at a three-month low, after taking a dive under the 12,000 level for the first time since March 17. It closed at 12,029, down 1 percent. The S&P 500 was off nearly a percent at 1337.81.
Oil was a big factor for Wednesday's market, moving up amid news of a strike threat in Nigeria. Oil finished up $2.67 per barrel or 2 percent to $136.68, reversing three days of losses.
UBS director of floor operations Art Cashin said weekly jobless claims will be important to the market if there is a spike. "The Philly Fed could also be important if it is as weak as the New York Fed (Empire State survey)," he said.
Cashin said the market, which closed off its lows, could have been worse Wednesday.
"The S&P held twice in the afternoon at precisely the same level - 1333, and the Dow, which needed to hold 12,000, got just very marginally below. So, from a cocktail napkin charting system that would be a hold. Those two things averted going off a cliff," he said.
Financials were again among the worst performers, down 1.2 percent. Consumer discretionary stocks were the worst, off 1.9 percent, followed by technology, down 1.3 percent.
There's a bearishness surrounding the stock market as we head into the second quarter's close.
Dan Niles, technology analyst with Neuberger Berman, appeared on "Closing Bell" Wednesday. He said the housing market and oil are obstacles to the consumer and we haven't seen the worst impact of high oil prices yet. He also said the rebate checks are giving the economy an artificial buoyancy.
"We're probably the most defensive we've been in the portfolio in a number of years now," he said.
"What we're trying to do is assess what businesses actually benefit from this," said Niles. One stock he likes is MEMC Electronic, which provides solar wafers to the solar industry.
"Their business is booming. We're also buying more shares of eBay today." He called eBay a "Wal-Mart" of the Internet, where people shop for bargains in a soft economy.
Stocks in the News
Speaking of eBay, it holds its annual meeting Thursday. Biogen Idec is also holding its meeting. Investor Carl Icahn proposes a slate of three directors for the company's 12-member board.
Also worth watching is the Bank of America homebuilder conference in New York.
President Bush turns his focus to the Midwest floods with a visit to Cedar Rapids, Iowa on Thursday. Corn prices Wednesday traded close to $8 a bushel on worries that the flood damaged fields are in worse shape than expected.
The flooding is taking a serious toll on farming and business in the area, and the full impact has yet to be seen. Businesses remain under water, and railroads are diverting trains around miles of closed tracks. As Union Pacific has warned, it will take a bite out of earnings.
Deutsche Bank's chief U.S.economist Joseph LaVorgna says the flooding in the Midwest could also impact jobs data, and he is considering a downward revision to his June employment forecast. Thursday's jobless claims could show some clues about the potential impact, he says.
We know meat producers are already under pressure from high grain prices, and the flood is making that worse. Tyson Foods shares fell sharply Thursday after Fitch cut its debt rating to junk. Fitch said higher-than-expected grain costs and the length of time required to pass through those higher prices is cutting into profitability in the company's chicken business.
I wanted to learn more about this situation because it will no doubt hit the consumer hard. I spoke with friend and former colleague Janie Gabbett, who is the executive editor of meatingplace.com, a trade publisher for meat producers.
She pointed out that the meat processors were petitioning the EPA Thursday in an effort to get them to waive the ethanol mandate. They contend the required supply of corn for ethanol is competing with corn needed for livestock.
"The meat industry was already upset about the ethanol mandate. The need for corn for ethanol had already boosted corn prices. Now with the corn crop really under pressure, they are looking for anything to relieve escalating prices," she said.
"The USDA estimates 4 billion bushels would go to ethanol. They estimated the U.S. corn crop would be about 11.7 billion bushels, and this was before the impact of this week's flooding," she said. She noted that Farm Futures magazine is now estimating up to 3.3 million acres of farm land could be flooded.
I asked Gabbett how much meat prices are expected to rise, and she said the answer is complicated. Cattle can be fed things other than corn, but American consumers prefer the taste of corn-fed livestock.
"Consumers themselves will dictate retail beef prices to some degree. If consumers turn up their noses at expensive beef in the the grocery store meat case and choose cheaper chicken and pork instead, then there will be a limit to how far retail beef prices can rise," she notes.
"That said, over time, if ranchers and processors can't make money, they'll raise and slaughter fewer cattle. Cattle futures hit a 22-week high this week on precisely these concerns," said Gabbett.
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