Stocks Retreat as Cisco Drags on Dow
Stocks pulled back Thursday after a higher open as Cisco dragged on the Dow.
Ciscobeat earnings expectations after the bell Wednesday and said business conditions were improving, but CEO John Chambers also said it's too soon to call a recovery.
Earlier, the drop in jobless claims had spurred optimism about the recovery.
The report showed initial claims for unemployment benefits fell by 38,000 last week, much more than expected. The total number of people on unemployment benefits continued to rise, indicating that new layoffs are tapering off but job creation hasn't started to pick up yet.
This came after a pair of disappointing employment reports yesterday: ADP said 371,000 jobs were cutfrom private-sector payrolls in July, more than the 335,000-loss expected. And Challenger, Gray & Christmas reported that planned job cuts jumped 31 percent last month.
Jobs are at the forefront of traders' minds as Friday brings the government's employment report. Economists expect it to show 320,000 jobs were dropped from nonfarm payrolls in July, following a loss of 467,000 in June.
Financial stocks were the Dow's top percentage gainers after some encouraging analyst comments.
American Express led Dow gainers after analysts said credit problems may be stabilizing and one even upgraded its rating on the stock.
Bank of America was in the Dow's No. 2 spot after Keefe, Bruyette & Woods said the bank will likely post mild losses in the second half and turn profitable in 2010.
AIG shot up more than 25 percent, bringing the stock to nearly $29, following a front-page story in the Wall Street Journal today that banks and lawyers could stand to collect nearly $1 billion in fees from the breakup of the insurer.
Former AIG CEO Hank Greenberg agreed to pay $15 millionto settle past accounting issues with the SEC.
CIT Group jumped more than 20 percent after the lender recently secured a $3 loan facility from bondholders.
Morgan Stanley agreed to pay $950 million to the government to repay its TARP loan, representing a 20-percent return for the government.
Ford was again higher after the Senate reached a deal late Wednesday to extend the "Cash for Clunkers" programthrough September, pumping another $2 billion into the program.
And General Motors announced plans for a plug-in rechargeable midsize SUV, to be released sometime in late 2010 or in 2011.
Retailers released their July chain-store sales this morning, falling short of already low expectations.
But retail stocks were higher, with Macy's and Gap up more than 5 percent.
After the bell today, we'll hear from CBS , Nvidia, and VeriSign, among others.
THURSDAY: Chain-store sales; Earnings from Sirius XM, Unilever
FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media
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