By Kristina Peterson
U.S. stocks struggled to hold on to morning gains Thursday, as
financial- and tech-stock losses countered a larger-than-expected
decline in jobless claims and robust same-store sales from a
handful of retailers.
After breaking above 10,000 Wednesday, the Dow Jones Industrial
Average (DJI) recently rose 39 points, or 0.4%, to 10,058. Boeing
(BA) advanced 1.7% after saying it will acquire Narus, a privately
held software company that specializes in protecting large Internet
protocol networks from attack. DuPont (DD) added 1.5%, and
McDonald's (MCD) gained 1.2%.
Technology companies checked the Dow's gains, as Cisco Systems
(CSCO) and Intel (INTC) each fell 1.3%.
The Nasdaq Composite (RIXF) slipped 0.1% to 2,157. The Standard
& Poor's 500 index (SPX) rose nearly 2 points to 1,062,
pressured by its technology sector. Micron Technology (MU) dropped
3.5%, and Nvidia (NVDA), which makes graphics chips and other
products, fell 3.5%.
Financials also weakened. Goldman Sachs Group (GS) fell 1.3%
after Meredith Whitney cut her second-quarter earnings estimates
for Goldman Sachs, according to Bloomberg.
Wells Fargo (WFC) dropped 1.2% after saying it will shut down a
unit that makes what the San Francisco bank calls "non-prime" real
estate, auto and credit-card loans and stop originating non-prime
mortgages, eliminating a total of 3,800 jobs, or 1.4% of its work
force.
However, consumer staples strengthened, boosted by strong June
sales at warehouse retailer Costco Wholesale (COST). Costco shares
gained 2% after its June same-store sales rose 4%, slightly below
expectations for a rise of 4.2%, though the company noted the shift
in Memorial Day hurt sales by about 2%. Walgreen (WAG) rose 2.5%,
while Tyson Foods (TSN) gained 1.2%.
Boosting the market earlier, the Labor Department said initial
claims for jobless benefits declined by 21,000 to 454,000 in the
week ended July 3, more than the 12,000 drop expected by
economists. However, the previous week's level was revised upward,
to 475,000, from 472,000. .
"The market felt very negative with the last jobs report. This
takes the edge of the negativity off that, at least for today,"
said Benny Lorenzo, chairman and chief executive of Kaufman
Brothers.
Investors said the decline in jobless claims was encouraging,
but noted the number of claims remains stubbornly above 450,000, a
sign that job creation is still stalled.
Safe-haven assets declined as economic optimism strengthened. As
demand for Treasurys slid, the yield on the benchmark 10-year note
(UST10Y) rose above 3% for the first time since June 29. The
10-year note was recently down to yield 3.02%.
Bank stocks were mixed Thursday after European Central Bank
President Jean-Claude Trichet said Thursday that banks and
regulators must take "appropriate action" to strengthen banks'
resilience against shocks and safeguard the health of Europe's
financial system. Earlier, the ECB decided to keep its benchmark
rate unchanged, as did the Bank of England at its monthly meeting.
.
J.P. Morgan Chase (JPM) slid 1.6%, while Bank of America (BAC)
edged down 0.3%.
Among retailers, June chain-store sales were mixed, with some
stores benefiting from aggressive promotions and others hurt by
consumers' continued restrained spending. Abercrombie & Fitch
(ANF) jumped 8.8% after same-store sales rose 9%, above analysts'
average estimate of 5.5% as the company benefited from aggressive
promotions last month. Limited Brands (LTD) gained 1.4% after its
June same-store sales rose 6%, nearly doubling expectations for a
rise of 3.2%.
However, teen retailers struggled, as Buckle (BKE) dropped 9.7%
after its June same-store sales slipped 7.3%, below estimates of a
0.1% gain. Wet Seal's (WTSLA) June sales dropped 3.6%, below
projections, and the company said its sees second-quarter earnings
below its prior guidance, sending shares down 6.9%. .
Among other stocks in focus, American depositary shares of BP
(BP) slipped 0.3% after setting a new target to seal the oil well.
The oil giant is BP pushing to fix its runaway Gulf oil well by
July 27, possibly weeks before the deadline the company is
discussing publicly, in a bid to show investors it has capped its
ballooning financial liabilities, The Wall Street Journal reported,
citing company officials. .
In currency markets, the dollar weakened against the euro, but
strengthened against the yen. The euro was recently trading at
$1.2665, up from $1.2642 late Wednesday in New York. Crude-oil
futures edged up.