The markets fell sharply early in the session as traders eyed a soaring greenback and weekly jobless claims data that were better than Wall Street’s forecast, but also elevated.
Today’s Markets
As of 9:51 a.m. ET, the Dow Jones Industrial Average fell 186 points, or 1.6%, to 11,710, the S&P 500 slipped 23.9 points, or 1.9%, to 1,236 and the Nasdaq Composite slid 56 points, or 2.1%, to 2,637. The FOX 50 tumbled 13 points, or 1.4%, to 887.
With the debt ceiling raised, focus on Wall Street has shifted to the beleaguered labor market.
The number of individuals applying for first-time unemployment benefits fell to 400,000 from a revised 401,000 in the prior week, slightly better than the 405,000 economists were expecting. However, claims have remained right around the 400,000-level for weeks, leading economists to question the robustness of the recovery in the labor markets.
“The pace of firings are moderating but are still too elevated at this point of the economic cycle,” wrote Peter Boockvar, managing director at Miller Tabak + Co., in a research note.
Other analysts see more improvement in the labor market: “This report and recent trends in claims data suggest that the softness in the labor market may be beginning to subside,” analysts at Barclays Capital noted.
In a sign of the uneasiness on Wall Street, gold, often seen as a safe-haven in tumultuous times has leaped to record higher two session in a row. The precious metal recently rose $14.70, or 0.9%, to $1,682. The VIX, sometimes referred to as a gauge of fear, jumped 6.7% in morning trade.
Energy and materials stocks, like Chevron (CVX: 99.53, -3.23, -3.14%) and Alcoa (AA: 13.78, -0.48, -3.33%), were the biggest drag on the Dow. While every major sector was down, a strong performance by Kraft Foods (KFT: 35.60, +1.30, +3.79%) helped buoy the non-discretionary consumer sector.
The European Central Bank held its benchmark interest rate steady at 1.5%, as was expected. ECB President Jean-Claude Trichet also said he expects the central bank to hold on to an accommodative monetary-policy stance, and sees a slowdown in economic growth. The euro tumbled on Trichet’s commentary amid concerns interest rates that are held lower low in the longer-term will negatively affect demand for the currency.
The euro fell 0.94% against the U.S. dollar, while the greenback jumped 1.4% against a basket of world currencies.
The Labor Department’s monthly employment report — which is widely considered to be one of the most important gauges of the economy — is slated for release on Friday. The unemployment rate is forecast to have held steady at 9.2%, with the economy adding 57,000 jobs. This comes on the heels of a report showing the labor market essentially stalled in the prior month.
A report released on Wednesday showed the private sector adding 114,000 jobs last month, modestly topping analysts’ estimates.
On the corporate front, Kraft Foods unveiled plans to spin off its North American grocery unit by the end of 2012. The Dow-component also posted quarterly profits that topped Wall Streets’ expectation.
General Motors (GM: 26.25, -0.92, -3.39%) posted second-quarter earnings of $1.54 a share, dashing past the consensus forecast of $1.20. The automaker’s revenue came in at $39.4 billion, also topping forecasts of $36.7 billion.
Energy markets fell sharply, extending the previous days selloff, amid strength in the dollar.
Light, sweet crude dipped $1.02, or 1.1%, to $90.92 a barrel. Wholesale RBOB gasoline slumped 3 cents, or 1.1%, to $2.90 a gallon.
Prices at the pump held steady for another night, although remain elevated as compared to last year. A gallon of regular costs $3.70 on average nationwide, up from $3.56 last month, and well higher than the $2.74 drivers paid last year, according to the AAA Fuel Gauge Report.
Foreign Markets
The English FTSE 100 fell 1.8% to 5,520, the French CAC 40 dipped 1.6% to 3,398 and the German DAX fell 1.1% to 6,566.
In Asia, the Japanese Nikkei 225 gained 0.23% to 9,659 and the Chinese Hang Seng slipped 0.49% to 21,885.
FN
