Stocks Pare Losses After Factory Report

Stocks opened lower Thursday amid a fresh round of layoffs and dismal same-store sales numbers, but soon turned mixed after an unexpected drop in jobless claims and better-than-expected factory-orders report.

Factory orders fell by 5.1 percent, the biggest drop in eight years, in October, but that was better than the 5.4-percent drop expected. September was revised downward to show a 3.1-percent decline, compared with the prior estimate of a 2.5-percent drop.

Jobless claims fell by 21,000 to 509,000 last week, the Labor Department reported. Economists had expected claims to rise by 11,000.

The Dow Jones Industrial Average bobbed in and out of positive territory after starting the day off down about 65 points.

Dow components AT&T and DuPont both said they would slash thousands of jobs—AT&T plans to cut 12,000 jobs, or 4 percent of its workforce, while DuPont said it would eliminate 2,500 positions.

Pharmaceutical giant and Dow component Merck lowered its 2009 earnings forecast due to weak sales of several of its key medicines. The company said it expected earnings, excluding special items, of $3.15 to $3.30 per share. Analysts polled by Reuters Estimates were expecting $3.52, on average.

Elsewhere, telecom Nokia cut its forecast for the second time in three weeks on a belief that the market downturn had accelerated and 2009 would be a difficult year.

Swiss banking regulator Credit Suisse warned on its fourth-quarter results and said it would cut another 5,300 jobs.

Reflecting the global stretch of the credit crisis, the European Central Bank cut interest rates by three-quarters of a percentage point to 2.50 percent, the biggest cut in the central bank's 10-year existence. The Bank of England cut its prime lending rate by a full percentage point to a 57-year low of 2 percent.

The moves, though, had little effect on US markets amid anxiety over the profit warnings and layoffs hitting closer to home.

Meanwhile, Treasury Secretary Henry Paulson is considering whether to ask Congress for the remaining $350 billion of the financial bailout fund. White House aides asked President-elect Barack Obama's transition team about the funds, according to an Obama aide.

And top executives at Citigroup may wave their bonuses this year as the ongoing credit crisis results in intense scrutiny of the once bumper end-of-year payouts, the Financial Times reported.

Wal-Mart reported its same-store sales rose 3.4 percent, better than expected, but outside of the discount giant, November retail-sales results were dismal as consumers postponed much of their shopping outside of essentials.

Still to come: October's factory orders numbers are due out at 10 am.

Chicago Fed President Charles Evans will speak at 10:45 am; Fed Chairman Ben Bernanke will speak on the subject of housing and housing finance at 11:15 am.

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