Stocks finished Thursday mixed, as investor enthusiasm over a sharp drop in initial unemployment claims was offset by rising oil prices and a disappointing wholesale inventories report.
Technology shares benefited from a pair of outlook upgrades and strong earnings from National Semiconductor Corp.
Investors grew more cautious through the session as oil prices climbed, topping the $44 per barrel mark after weeks of declines. A barrel of light crude rose $1.84 to settle at $44.61 a barrel on the New York Mercantile Exchange.
Wall Street was also disappointed by the Commerce Department’s report on wholesale inventories, which rose 1.3 percent in July, double what economists had expected. Wholesale sales rose by only 0.5 percent — which means that business and consumer spending has trailed off and more products are sitting in warehouses.
“We’re starting to see some real evidence of softness in consumer spending,” said Russ Koesterich, U.S. equity strategist for State Street Corp. in Boston. “I don’t think the economy is falling off a cliff. It’s chugging along at a moderate pace, but will it be enough to keep corporate profits where they need to be? That’s the question.”
Improvements in the nation’s job picture could help spur consumers. The Labor Department reported 319,000 new unemployment claims for the past week, down 44,000 from a week ago. It was the lowest level of first-time claims since July.
At the close, the Dow Jones industrial average was down 24.26 points, or 0.2 percent, at 10,289.10, while the broader Standard & Poor’s 500-stock index was up 2.11 points, or 0.2 percent, at 1,118.38. The Nasdaq composite index, full of technology shares, rallied 19.01 points, or 1 percent, to close at 1,869.65.
The economic data will likely weigh heavily on the Federal Reserve as it prepares to meet Sept. 21 to discuss another hike in the nation’s benchmark interest rate, which currently stands at 1.5 percent. The improved jobs picture increases the chances that the Fed will raise rates by a quarter percentage point, even though raising rates in the midst of an election can sometimes weigh on the presidential incumbent.
While Fed Chairman Alan Greenspan was optimistic about the economy’s strength in his congressional testimony Wednesday, Wall Street took a more cautious view, waiting to see how the summer’s economic slowdown will affect third- and fourth-quarter earnings.
“The takeaway we’re getting from the Fed is that the economy’s growing, but it’s uneven,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. “Add to that the lack of direction in the market, and the next catalyst for the market won’t be the Fed meeting or interest rates. It’ll be company earnings, and whether there’s been enough top-line movement to have an impact on the bottom line.”
Tech stocks, battered this summer after a series of disappointing earnings reports, were buoyed by a rare spate of good news. Nokia Corp. jumped $1.06 to $13.77 after the Finnish maker of cellular phones raised its sales and profit outlooks for the current quarter. The company cited stronger demand for multi-function mobile devices.
Texas Instruments Inc. said it expected its third-quarter earnings to come in above the middle of its previous estimate range. The chip maker, while warning that sales could fall below its past outlook due to low demand, nonetheless gained $1.94 to $20.77.
During the session, National Semiconductor Corp. reported a 29 percent jump in sales, beating Wall Street estimates by 5 cents per share, but added that profits for the current quarter would likely fall 8 to 10 percent in comparison. National Semiconductor closed 52 cents higher at $12.52.
Procter & Gamble Co. confirmed that its earnings were on target for the 72 cents per share forecast by analysts. The consumer products maker said profits would grow at least 10 percent for the current quarter. Procter & Gamble fell 64 cents to $56.09.
Supermarket chain Pathmark Stores Inc. tumbled $1.32 to $5.85 after it said it lost five cents per share in the second quarter and would likely default on some of the terms of its credit agreement in the current quarter. The company also reduced its full-year earnings guidance.
Overseas, Japan’s Nikkei stock average dropped 1 percent. In Europe, Britain’s FTSE 100 closed down 0.5 percent, France’s CAC-40 lost 0.7 percent for the session and Germany’s DAX index fell 0.9 percent.
Officials at the Nasdaq Stock Market and the American Stock Exchange will halt to trading from 11 a.m. to 11:01 a.m. on Friday to observe a minute of silence in memory of the victims of the Sept. 11 attacks. Nasdaq will also place commemorative displays on its Marketsite building in Times Square on Friday and Saturday.