By Kate Gibson
U.S. stocks ended sharply lower Thursday as a gloomy jobs report
and other downbeat reports put the U.S. economic recovery in doubt
and overshadowed fresh merger and acquisition activity.
The Dow Jones Industrial Average (DJI) fell 144.33, or 1.4%, to
end at 10271.2, with all 30 blue-chip components in the red for the
day.
The hit to Wall Street came as economic reports showed weekly
jobless claims rising to a nine-month high
In addition, manufacturing in the Philadelphia region contracted
and, the Conference Board said its index of leading economic
indicators climbed just 0.1% in July, with the lackluster rise
pointing to slowing growth. .
"As we worked our way over the past couple of months, the one
thing we could hang our hat on was that at least manufacturing is
working and hopefully the non-manufacturing sector will kick in,"
Art Hogan, chief market strategist at Jefferies & Company, said
of the disappointing reports. Hear what Hogan has to say about
prospects of a double-dip.
"The outlook for the economy over the next few quarters with a
lack of jobs growth is very uncertain," said Michael Sheldon, chief
market strategist at RDM Financial Group.
Intel (INTC) led the declines in the Dow Industrials, falling
3.5% to 18.90 after announcing plans to acquire security software
maker McAfee Inc. (MFE) in the chipmaker's largest-ever deal. Intel
is paying a roughly 60% premium over McAfee's closing price
Wednesday. .
"It's nice that Fortune 500 companies are sitting on $2 trillion
in cash, and the potential of more buyouts may be on the horizon,"
said Todd Schoenberg, managing director at LandColt Trading.
But "companies are not using this cash to add to payrolls, and
eventually this will be the primary reason why we may be returning
to recessionary times," Schoenberg added.
The S&P 500 Index (SPX) fell 18.53 points, or 1.7%, to
1,075.63, with financials leading all sectors lower.
"If the market continues its slide tomorrow, I expect the
S&P 500 to make a stand in the 1,055 to 1,060 area," wrote
Elliot Spar, market strategist at Stifel Nicolaus.
The Nasdaq Composite (RIXF) declined 36.75 points, or 1.66%, to
2,178.95.
Losers outpaced advancers by a roughly 5-to-1 ratio on the New
York Stock Exchange, where 1.07 billion shares traded. Composite
volume hit 4.44 billion.
Crude-oil futures retreated to end at $74.43 a barrel, and gold
hit a seven-week high and closed at $1,235.40 an ounce on the Comex
division of the New York Mercantile Exchange. .
Bond bulls
"The most bullish reason that investors should buy stocks right
now is that when you compare the dividend on high-quality,
blue-chip stocks with the yield on risk-free Treasury bonds, and
you have a five-to-10-year horizon, stocks look relatively
attractive," said Sheldon.
But given the shaky economic environment, "it's hard to make
that leap of faith for investors piling money into the fixed-income
market that they should change course," Sheldon added.
On Wednesday, investors continued to pour resources into
government bonds, as the government said it would sell $109 billion
in debt next week. .
The flight to assets perceived as safe strengthened the U.S.
dollar, with the dollar index (DXY) at 82.54 from 82.17 late
Wednesday. .