Stocks Cut Losses, but Economic Worries Loom
Stocks shaved some of its losses in mid-afternoon trading Thursday, but worries about Greece and the financial reform continued to weigh on the market.
The Dow Jones Industrial Average was down about 50 points, after eking out a gain on Wednesday.
The S&P 500 and the Nasdaq were also lower lower. The CBOE volatility index, widely considered the best gauge of fear in the market, climbed above 29.
Despite recent market pullbacks, some market pros are still optimistic about the economy.
“Even though I think we’re going to be sideways for a while, longer-term, the underpinnings of the U.S. economy still look pretty good and we’re going to get through this European crisis as well,” Rob Morgan, chief investment strategist at Fulcrum Securities told CNBC.
JPMorgan was one of the biggest drags on the Dow, while Kraft and Boeing were among the handful of gainers.
Financials overall were one of the day's worst performers as worries about the financial-reform billand another earnings downgrade weighed on the sector.
Rochdale analyst Dick Bove lowered his projectionfor Goldman Sachs earnings to $1.93 a share from his prior estimate of $2.93 a share, citing a variety of factors, including a slowdown in the economy and a hefty charge for a one-time bonus tax in London. Not only is the estimate a full dollar below his prior estimate, but it's less than half that of the mean estimate of $4.10 a share.
Retail stocks also took a hit, with JC Penney and Macy's down almost 5 percent, as investors worried about the economic recovery.
Meanwhile, the Federal Reserve said it will offer $2 billion in 28-day term deposits starting Monday, in an attempt to drain excess reserves from the financial system. This comes a day after the Fed acknowledged in its statement that the European debt crisis will take a toll on the U.S. economy.
Today's economic news was slightly encouraging: Jobless claims dropped by 19,000last weekto 457,000, much better than the 7,000 drop expected. And orders for durable goods, long-lasting items like cars and appliances, fell for the first time in six months but the 1.1-percent drop was less than expected.
Treasurys extended gains after a solid auction of seven-year notes. The $30 billion sale fetched a high yield of 2.575 percent and the bid-to-cover ratio was 3.01.
Oil prices traded near $76 a barrel, while gold rose above $1,240 an ounce. The dollar gained against the euro.
Concerns over Greece weighed on the market as the nation's credit-default swaps, the cost of protecting it against default on its debt, hit a record high.
A lot of buzz about Apple as the iPhone 4, the fourth iPhone model in as many years, hit store shelves today amid speculation that the company could sell a million of them on the first day — something it took a few months to do with previous models.
And Brokerage Sterne Agee raised its price target on the iPhone maker to $320 from $300.
Google won a victory after a federal judge tossed Viacom's $1 billion suit over copyrighted videos appearing on Google's YouTube video site.
Dell said it expects revenue to jump 14 to 19 percent in fiscal 2011 as both consumer and corporate spending improves.
Hasbro shares jumped after a report that Providence Equity Partners is in early talks for a leveraged buyout of the toy maker. Wedbush raised its price target on the firm to $52 from $46.
Meanwhile, Pfizer shares fell after the pharmaceutical firm said it suspended clinical trials of its experimental biotech arthritis drug at the request of the FDA.
The Gulf of Mexico oil spill continued, with BP reverting to an earlier tactic of collecting oil from the ruptured well. As well as the environmental damage, the spill is also taking its toll of President Obama's approval rating, which fell to 45 percent, according to a recent poll.
Housing continued to weigh on the market, after builder Lennar reported a quarterly profit as the homebuyer tax credit wound down, but new orders slowed and cancellations rose.
Elsewhere in earnings, ConAgra reported profit of 20 cents a sharethat missed analyst expectations.
Shares of Nike fell almost 5 percent after the sporting goods maker warned that the strong dollar and higher costs would affect earnings and revenue. Citigroup removed the firm from its top picks list.
Oracle and Research In Motion are scheduled to post their earnings after the closing bell while KBHome is expected to report on Friday.
General Motors may be filing for a public offering of stock as soon as next week that could raise up to $20 billion in one of the largest IPOs ever in the U.S.
Still to Come:
THURSDAY: Yahoo shareholders meeting; Earnings from Oracle and Research In Motion after the bell
FRIDAY: Final read on Q1 GDP; corporate profits; consumer sentiment; XTO shareholders meeting on Exxon buyout; Earnings from KB Home
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