The US stocks closed the session mixed on Thursday as the stronger greenback dragged on the companies dealing on commodities while the financials and shares in the techs maintained ground.
The Dow Jones Industrial average lost 2 point or less that 0.1% to close the day at $11,370. The S&P 500 added 0.4% or 5 points to end at 1,233 while Nasdaq went up 7 points or 0.3% o finish at 2,617.
Bank of America and JP Morgan were among the top performers at the Dow increasing on the gains of the previous session. The stocks of the bank had dragged the market earlier in the year but investors are now gaining more interest in the financials after the improvement of economic conditions.
DuPont was the dragged at the Dow after it dropped 1.3% as the company issued an outlook for 2011 that disappointed the investors. Consumer stocks that also tumbled included those of McDonald’s and Johnson & Johnson.
The stocks opened higher after the following a government report indicated an improvement in the number of jobless claims being filed although the momentum faded as the stronger dollar pushed up the price of the commodities weighing down the shares of companies such as Boeing and 3M.
Mark Luschini, the chief investment strategist at Janney Montgomery Scott stated that the markets are listing a little bit because of the absence of major economic news. He also added that the investors are waiting for the final report from Washington on the Bush-era tax cuts for those who are making over $250,000 a year.
On Thursday, House Democrats voted against the tax package which would also see the extension of the unemployment benefits and the creation of payroll tax holiday.
The uneven trading on Thursday followed a big advance the week before which saw the Dow and the S&P 500 rallied to their highest levels in two years.
Abigail Doolittle, founder Peak Theories Research attributed the consolidation in the market to the rally last week saying that it is not surprising. She also added that the market is driven majorly by the dollar.
The Dollar index, a measure of the greenback against other currencies went up to 80 from 79.9, weighing on oil prices although gold defended modest gains.
The investors’ attention is also on the Treasury market where yields have gone up in the week after an improved outlook in the economy. They are also focusing on the concerns over the US budget deficit and inflation.
Wednesday saw the socks eking out gains after the bank shares rebound eliminated the concerns over the rising interest rates in the treasury market.
Economy
The number of people filing for initial jobless claims dropped 17,000 to 421,000 from 436,000 in the previous week according to the Labor Department’s weekly job claims. Economists had expected the number to reach 429,000.
Initial unemployment claims helped in giving a read in the labor market. According to Scott Brown, Chief Economist at Raymond James the labor market tends to be choppy at this time of the year due to the seasonal adjustment. He added that the numbers can jump around week to week and the focus should remain on a four week moving average rather than on the gains and losses in a weekly basis/
The four week moving average is calculated to smooth out the volatility in the data and it dropped by 4,000 to 427,000.
The department of commerce also released the report on wholesale inventories which indicated a 1.9% in October after a revised increase of 0.6% in September. The October gain was higher as compared to the expected gain of 0.7%.
Companies
Shares of AIG went up 1.3% following the finalization of the terms of the insurance companies restructuring of the federal bailout.
Howard Stern announced that he had re-signed with SiriusXM Radio for five years. The shares of SiriusXM increased 6.5% in early trade.
Dell made a bid for Compellent Technologies INC. for $27.50, a price lower than the $33.65 per share that the data storage company ended with on Wednesday. The shares of Dell were little changed while that of Compellent lost 14%.
Freeport-McMoRan announced the payment of a special dividend of 1% per share in this year. It also announced a two-for-one split in its common stock.
Shares of Lululemon Athletica gained 14% after the Canadian manufacturer of yoga apparel announced that the third quarter net income doubled to $42.4 million.
After the closing of the market, the Green Mountain Coffee reported earnings of 20 cents per share on an income of $27million up from $14.1 million or 11 cents per share in the same period a year before. According to the estimates of Thomson’s Financial Analysts had expected earnings of 20 cents per share.
The shares dropped 10% in the after hours trading after the investors reacted to the company’s outlook in the next year. It lowered the bottom end of he forecast by 3 cents stating that it expects the coffee prices to be volatile and that it anticipates new product launches thus it needs flexibility to support it.
Currencies and Commodities
The Dollar gained against the Euro and the British pound but lost against the Japanese yen.
Oil delivery for January added 9 cents to close at $88.37 a barrel.
Gold futures for February delivery added $9.60 to close at $1,392.80 an ounce.
Bonds
The yields of the 10-year Treasury note dropped to 3.22% from 3.25% late Wednesday after the prices went up. This note hit a high of 3.33% on Wednesday up 36 basis points from Monday making it the biggest two-day gain since September 2008.
The prices rebounded after the US sold $13billion in re-opened 30-year bonds, the last of the three auctions I the week making a total of $66 billion in 3-, 10- and 30-year treasuries.
World Markets
European Stocks ended mixed with Britain’s FTSE 100 rising 0.2% and France’s CAC 40 gaining 0.4%. The DAX in Germany lost 0.2%.
Asian Markets also ended mixed with the Shanghai Composite losing 1.3%. The Hang Seng in Hong Kong added 0.3% and Japan’s Nikkei increased 0.5%.
