By Donna Kardos Yesalavich
U.S. stocks opened lower Thursday as concerns over unemployment
and Europe's national debts outweighed an upbeat earnings report
from Cisco and better-than-expected January sales from a number of
retailers.
The Dow Jones Industrial Average (DJI) fell 84 points, or 0.8%,
to 10,185. Alcoa (AA) was the measure's worst performer, off 2.2%
as metals futures fell. General Electric (GE) was also particularly
weak, down 2%.
Cisco (CSCO) was the Dow's only component in the black, up 2%
after the big maker of networking gear reported a 23% profit rise
and said current quarter sales may grow as much as 26%. The company
also plans to hire 2,000 to 3,000 workers over the next few
quarters.
The technology-heavy Nasdaq Composite (RIXF) slipped 0.7%. The
Standard & Poor's 500 (SPX) declined 1%, with all its sectors
in the red. Its materials and energy categories were hit the
hardest as gold futures and crude-oil futures slipped.
In other markets, the euro hit a seven-month low against the
dollar. The dollar was lower against the yen. Treasurys (TNX) edged
higher, with the 10-year note up 1/4 to yield 3.676%.
The action came as worries about Europe's national debts
intensified Thursday as the cost of insuring the debt of euro-zone
members with large budget deficits against default rose, dashing
hopes that the European Commission's qualified endorsement of
Greece's budget plan would calm investor fears.
The concerns followed news that the European Commission had put
Greece under more pressure to cut its deficit; that the Portuguese
government sold only 300 million ($417 million) of treasury bills
at an auction, compared with an indicative offer of 500 million
euros; and that the Spanish government had raised its budget
deficit forecasts for 2010 through 2012.
U.S. economic data released Thursday morning added to investors'
jitters. The Labor Department said initial claims for jobless
benefits rose by 8,000 last week. Economists had expected a
decrease of 10,000. The four-week moving average, which aims to
smooth volatility in the data, also increased for the week ending
Jan. 30.
Thursday's spike in claims comes just one day before the Labor
Department is slated to release its January jobs report. Economists
expect nonfarm payroll numbers to remain flat, although they are
also forecasting a slight increase in the unemployment rate from
10%to 10.1%.
Separate data released Thursday showed nonfarm business labor
productivity rose by a seasonally-adjusted annual rate of 6.2% in
the October-to-December period, slightly below the 7% increase that
was expected. Meanwhile, unit labor costs, a measure of what it
costs firms to pay workers for a single unit of output they
produce, fell at a 4.4% annual rate in the last three months of
2009. Economists had forecast a 3.5% drop.
A number of retailers reported January same-store sales above
analysts' estimates, with some also offering upbeat outlooks.
Macy's (M) jumped 4.6% after the department-store operator
reported better-than-expected fiscal fourth-quarter sales as its
strategy to localize products in its stores has paid off, leading
it to lift its earnings target.
Abercrombie & Fitch (ANF) jumped 6.3%. The teen retailer,
which has struggled during the recession, posted growth of 8% for
January same-store sales, when analysts expected a 8.4% drop.
Data on U.S. factory orders are due at 10 a.m., EST.