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Stocks Well Off Lows But Still Down In Mid-Morning Trading
Stocks have moved well off of their worst levels since the opening bell but remain mostly lower in mid-morning trading on Thursday. Prospects of a dwindling economic recovery, concerns over the job market and disappointing quarterly results from Cisco (CSCO) are driving selling pressure, with the tech sector experiencing a particularly sharp decline.
The tech heavy Nasdaq is down by 28.07 points or 1.3 percent at 2,180.56, the Dow is down by 74.62 points or 0.7 percent at 10,304.21 and the S&P 500 is down by 9.63 points or 0.9 percent at 1,079.84.
Before the start of trading, the Labor Department reported that initial jobless claims rose to 484,000 in the week ended August 7th from the previous week’s revised figured of 482,000. Economists had been expecting jobless claims to fall to 465,000 from the 479,000 originally reported for the previous week.
Commenting on the data, Peter Boockvar, equity strategist at Miller Tabak, said, “Bottom line, seasonal distortions or not, initial claims are still too high and point to a still lame labor market.”
Earlier in the day, RealtyTrac, an online marketplace for foreclosure properties, said that foreclosure filings in July dropped 10 percent from last year but grew 4 percent from the previous month.
The market researcher said one in every 397 U.S. housing units received a foreclosure filing during the month. July’s bank repossession increased both year-over-year and sequentially.
Cisco Systems, which reported its fourth quarter results after the closing bell yesterday, is also weighing on the markets. The firm said its fourth quarter earnings per share, excluding items, beat analyst estimates by penny, but its quarterly sales were short of estimates.
While Cisco also said it expects first quarter revenues to increase by 18 to 20 percent, analysts had been expecting slightly stronger growth.
This morning, Kohl’s Corp. (KSS) reported second-quarter net income and revenues that edged out forecasts, although the firm’s third quarter earnings guidance missed expectations.
General Motors reported a profit for the second quarter of $1.3 billion, up from $865 million in the preceding quarter, while sales at the Detroit-based company came in at $33.2 billion, versus $31.5 billion in the first quarter.
Tech stocks are among the morning’s worst performers, with networking, electronic storage and semiconductor stocks all markedly lower.
The NYSE Arca Networking Index is down by 4.2 percent, falling to its intraday level in over a month, with Cisco helping to lead the way lower.
The Philadelphia Semiconductor Index is posting a 1.9 percent loss after setting a six-month intraday low in earlier dealing.
Housing, trucking and defense stocks are also seeing heavy selling, while gold stocks are higher, benefiting from the day’s risk aversion. The NYSE Arca Gold Bugs Index is up by 2 percent, while the price of gold is up by $15.60 to $1,214.80 an ounce.
Stocks Driven By Analyst Comments
Electronic storage firm NetApp (NTAP) is notably lower after being downgraded at Merriman from Buy to Neutral. The stock is down by 7.1 percent after setting its lowest intraday price in nearly five weeks.
Networking firm Finisar (FNSR) is also under pressure after analysts at Auriga U.S.A. lowered their rating on the stock from Buy to Hold. The broker also downgraded its target on the stock from $19 to $16. Shares are currently down by 7.6 percent and also set a five-week intraday low.
Weakness is also present in shares of tech firm Flextronics (FLEX), which are lower after Ticonderoga dropped its rating on the stock from Neutral to Sell. The stock is posting a loss of 3.9 percent after falling to its lowest intraday level in nearly six weeks in earlier trading.
In overseas trading, stock markets across the Asia-Pacific region ended on the downside Thursday. Hong Kong’s Hang Seng Index and Japan’s benchmark Nikkei 225 both fell by 0.9 percent.
The major European markets are also under pressure. The French CAC 40 Index and the German DAX Index are both down by 0.5 percent, while the U.K.’s FTSE 100 Index is down by 0.2 percent.
In the bond markets, treasuries are moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.724 percent, posting a gain of 3.9 percent.
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