US stocks end lower as initial claims data disappoint

Investors search direction for clarity on the sustainability of the economic recovery

Disappointing initial claims data gave a very weak start to stocks on Thursday, 05 August 2010. Stocks were stuck in negative territory with modest losses for the entire session. The action came ahead of tomorrow's pivotal nonfarm payrolls report. At the end, stocks managed to pare part of heir losses though. Investors searched for clarity on the sustainability of the economic recovery ahead.



For the day, that ended on Thursday, 05 August 2010, Dow ended lower by 5.45 points at 10,674.98. Nasdaq ended lower by 10.51 points at 2,293.06. S&P 500 ended lower by 1.43 points at 1,125.81. Dow was trading lower by 43 points earlier during the day.

Five out of ten economic sectors ended in the red led by consumer staples, financials, and technology sectors. Materials, telecom and industrial sectors were the winners. Utilities sector remained unchanged.

Among economic data expected for the day, The Labor Department in US reported on Thursday, 05 August 2010 that the number of people applying for initial unemployment benefits jumped 19,000 to 479,000 in the latest week to the highest level since early April. Market was expecting a decline in the number. Claims are 5.5% higher compared to the end of 2009. The four-week average of initial claims, a better gauge of employment trends than the volatile weekly number rose by 5,250 to 453,250.

The report detailed that the number of workers who continue to receive unemployment checks, meanwhile, fell by 34,000 to 4.54 million in the week ended 24 July 2010. The four-week average of continuing claims increased by 25,750 to 4.58 million.

In a separate report, it showed that same store sales for July checked in mixed in nature. Among the retailers, Abercrombie & Fitch posted stronger-than-expected same-store sales for July and greater-than-expected revenue figure for the latest quarter. Macy's also had stronger-than-expected same-store sales results, and went on to issue upside guidance.

Among the earning reports scheduled for the day, insurer Hartford swung to a second-quarter profit, but lowered its 2010 target for operating earnings.

In the technology sector, Microsoft, Xerox and Oracle weighed on the Nasdaq.

Crude oil prices ended lower for second straight day on Thursday, 05 August 2010. Prices dropped in tandem with US stocks after initial claims data disappointed traders today. On Thursday, crude oil futures for light sweet crude for September delivery closed at $82.01/barrel (lower by $0.56 or 0.5%). Yesterday, prices dropped for first time after rising for four straight sessions.

On Thursday, natural gas for September delivery retreated 14 cents to $4.59 per million British thermal units. EIA reported an increase of 29 billion cubic feet to natural gas in storage for last week. That compares to a build of 67 billion cubic feet in the same week of 2009, as well as the five-year average of 47 billion cubic feet.

Bullion metal prices ended higher on Thursday, 05 August 2010 at Comex. A weaker than expected initial claims data increased the appeal of precious metals as an alternate investment. Physical demand of precious metals also rose in anticipation of India's wedding season, starting later this month, as jewelers are expected to snap up the metal at bargain prices ahead of the festivities.

On Thursday, gold for December delivery ended at $1,199.3 an ounce, higher by $3.4 (0.3%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $1,202.8 and fell to a low of $1,192. Prices rose for seven consecutive sessions. September Comex silver futures ended higher by 4 cents (0.2%) at $18.32 an ounce.

Volume was relatively weak, but in line with this week's lighter trend. Decliners outnumbered advancers by a ratio of two to one.

Almost all Indian ADRs ended lower on Thursday, Infosys and Wipro tech were the largest losers shedding 1.8% each. Tata Motors and HDFC bank were a handful of winners gaining 0.4% and 0.1% respectively.

Tomorrow, the economic data expected for the day are the non farm payrolls and unemployment data for last week. Other than that, earning reports will continue to pour in.