Shares on Wall Street struggled Thursday as traders took in reports on retail sales and the economy. þþThe Labor Department reported that 409,000 people applied for initial unemployment benefits last week. That was up from 388,000 the previous week, when applications fell to their lowest level in more than two years. Still, fewer than 425,000 people seeking unemployment benefits indicates modest job growth. þþOn Wednesday, the payroll processor ADP reported that private companies added 297,000 jobs last month, far more than the 100,000 economists expected. That gave investors encouragement that the economy is improving. þþAnother update on jobs comes Friday when the Labor Department releases its monthly report on total payrolls and the unemployment rate. Economists expect the rate will fall to 9.7 percent from 9.8 percent. þþ“As long as we see a fairly firm indication that jobs are continuing to be added, I think that will please the markets,” said Rob Lutts, president and chief investment officer of Cabot Money Management. þþRetailers are also offering additional insight into the economy and consumer spending as they release their December sales numbers. Early reports have been surprisingly weak. þþThe Target Corporation, the Costco Wholesale Corporation and Macy’s Inc. all reported sales gains that were below Wall Street expectations. That sent some of their stocks lower in pre-market trading. þþYet analysts still expect retail spending in November and December to show the largest annual increase since 2006. þþIn early trading, the Dow Jones industrial average 5.64 points. The Standard & Poor’s 500-stock index was flat. The Nasdaq was up 6.57, or 0.24 percent. þþIn Europe, the FTSE 100 in London was up 13.37 points, or 0.2 percent, while the DAX in Frankfurt rose 73.45 points, or 1.1 percent. The CAC 40 in France gained 21.24 points, or 0.5 percent. þþBond prices rose. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.46 percent late Wednesday. þþThe main talk in the markets is whether Friday’s unemployment data will echo the findings of the ADP report. þþ“A strong payrolls release of Friday would underpin talk that the U.S. recovery could be entering a new accelerated growth phase,” said Jane Foley, senior currency strategist at Rabobank International. þþMore jobs creation in the United States is obviously good news for stocks because it signifies that the economy is growing faster than before. However, it could pose problems because it may prompt the Federal Reserve to start withdrawing its monetary stimulus sooner than expected. As well as cutting its benchmark interest rate to near zero percent, the Fed has authorized two large money injections into the United States economy and is in the middle of a $600 billion effort. þþThe tentative concerns that the Fed may soon alter course seemed to weigh on stocks in the immediate aftermath of the jobs report but the optimists soon took charge — after all, higher growth means bigger profits and earnings. þþThe dollar had no such conflict as Treasury yields spiked sharply higher. That means that holding dollars is more attractive because the returns are potentially greater. þþ“The ADP report provided yet another clear signal that U.S. labor market conditions are improving, helping to further reassure investors over the sustainability of the U.S. economic recovery,” said Lee Hardman, a currency economist at the Bank of Tokyo-Mitsubishi UFJ. þþThe dollar remained buoyant Thursday, gaining against the euro, which was down 0.27 percent at $1.3113. However, it slipped against the yen, down 0.2 percent to 83.07 yen. þþWith the markets so fixated on events in the United States, developments in Europe’s debt crisis are taking a backseat — to the likely relief of the euro zone’s policy makers. þþThe debt crisis’s move away from the spotlight has helped a run of government bond auctions run smoothly. France easily sold bonds worth 9 billion euros on Thursday, following from successful auctions Wednesday by Germany and Portugal. þþThe French Treasury reported that it raised 8.975 billion euros, or $11.9 billion, through auctions of different-dated debt and that the yield on the benchmark 10-year issue rose to 3.36 percent from 2.87 percent at the previous auction — the increase in the yield was in line with increasing yields in the secondary markets since November for reasons including the debt crisis. þþEarlier in Asia, Japanese stocks jumped to a nearly eight-month high Thursday on the weaker yen; a worry in Japan in recent months has been the potentially negative impact of the higher yen on the country’s major exporters. þþJapan’s Nikkei 225 stock average, Asia’s largest market, rose 1.4 percent to 10,529.76, its highest close since May 13 þþGains elsewhere in Asia lagged Tokyo’s. Hong Kong’s Hang Seng index was up a marginal 0.1 percent to 23,786.30, while China’s Shanghai Composite index lost 0.5 percent to 2,824.20. þþRising expectations over the pace of the recovery in the United States helped oil prices move back above $90 a barrel Wednesday. þþBut on Thursday, benchmark oil for February delivery fell below that threshold, dropping 98 cents to $89.32 a barrel in New York trading. þþ
Source: NY Times
