Stocks fall as traders await Friday’s GDP report

Stocks initially rose on upbeat earnings reports, but momentum quickly faded. The Dow Jones industrial average fell about 70 points in afternoon trading and other major stock indexes also fell.

Southwest Airlines Co., ExxonMobil Corp., Avon Products Inc. and Sony Corp. all topped earnings forecasts, but investors were more focused on economic numbers. The Labor Department said initial claims for unemployment benefits dropped by a modest 11,000 to 457,000 last week. That’s slightly better than the 459,000 forecast by economists polled by Thomson Reuters, but not good enough to keep traders buying.

“They saw it was more of the same,” said Bryan Jordan, director of financial markets analysis at Nationwide Investments. “This is an unusually stagnant labor market.”

Daniel Penrod, senior industry analyst at the California Credit Union League, said investors are concerned because there hasn’t been a consistent decline in the number of claims for unemployment benefits.

“The stops and starts are likely to cause more hesitation” in the stock market, Penrod said.

Stock trading has been bumpy the past few months as investors tried to reconcile conflicting views of the economy. Government and private reports have pointed to a slowdown in growth while companies has issued optimistic outlooks. So, while the latest earnings reports looked good, investors are also well aware that the Federal Reserve said Wednesday that the recovery is weakening in some parts of the country.

“A bull market needs a continuing feeding of good news,” said Alan Gayle, senior investment strategist at RidgeWorth Investments. Economic reports have been “soft” this week, he said.

Traders were uneasy while they waited for the GDP, the broadest measure of the economy. Economists are forecasting that the GDP slowed in the second quarter to an annual rate of 2.5 percent as the government cut back on economic stimulus programs. That would be down from the first quarter’s 2.7 percent.

In afternoon trading, the Dow fell 70.68, or 0.7 percent, to 10,428.71. The Standard & Poor’s 500 index fell 9.72, or 0.9 percent, to 1,096.41, while the Nasdaq composite index fell 28.08, or 1.2 percent, to 2,236.48.

Declining stocks outpaced advancers by 2 to 1 on the New York Stock Exchange, where volume came to a low 512.1 million shares. Volume has been unusually low becauase many traders are waiting for the market to settle on a direction before they start buying or selling.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 2.99 percent compared with late Wednesday.

source : www.washingtonpost.com

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Submited at Friday, July 30th, 2010 at 1:44 am on Real Estate Industry by samantha
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